[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                    BANKING THE UNBANKED: EXPLORING
                  PRIVATE AND PUBLIC EFFORTS TO EXPAND
                     ACCESS TO THE FINANCIAL SYSTEM

=======================================================================

                             HYBRID HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON CONSUMER PROTECTION
                       AND FINANCIAL INSTITUTIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 21, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-41
                           
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
 
                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
45-508 PDF                 WASHINGTON : 2021                     
          
-----------------------------------------------------------------------------------  
 
 

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
BILL FOSTER, Illinois                FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio                   TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
RITCHIE TORRES, New York             JOHN ROSE, Tennessee
STEPHEN F. LYNCH, Massachusetts      BRYAN STEIL, Wisconsin
ALMA ADAMS, North Carolina           LANCE GOODEN, Texas
RASHIDA TLAIB, Michigan              WILLIAM TIMMONS, South Carolina
MADELEINE DEAN, Pennsylvania         VAN TAYLOR, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   PETE SESSIONS, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
     Subcommittee on Consumer Protection and Financial Institutions

                   ED PERLMUTTER, Colorado, Chairman

GREGORY W. MEEKS, New York           BLAINE LUETKEMEYER, Missouri, 
DAVID SCOTT, Georgia                     Ranking Member
NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
BRAD SHERMAN, California             BILL POSEY, Florida
AL GREEN, Texas                      ANDY BARR, Kentucky
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JUAN VARGAS, California              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   TED BUDD, North Carolina
MICHAEL SAN NICOLAS, Guam            DAVID KUSTOFF, Tennessee, Vice 
SEAN CASTEN, Illinois                    Ranking Member
AYANNA PRESSLEY, Massachusetts       JOHN ROSE, Tennessee
RITCHIE TORRES, New York             WILLIAM TIMMONS, South Carolina
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 21, 2021................................................     1
Appendix:
    July 21, 2021................................................    49

                               WITNESSES
                        Wednesday, July 21, 2021

Baradaran, Mehrsa, Professor of Law, University of California 
  Irvine School of Law...........................................     5
Berlau, John, Senior Fellow, Competitive Enterprise Institute 
  (CEI)..........................................................    12
Del Rio, Deyanira, Co-Executive Director, New Economy Project....     7
Pawar, Ameya, Senior Fellow, Economic Security Project...........     9
Rothstein, David, Senior Principal, Cities for Financial 
  Empowerment Fund...............................................    10

                                APPENDIX

Prepared statements:
    Baradaran, Mehrsa............................................    50
    Berlau, John.................................................    63
    Del Rio, Deyanira............................................    69
    Pawar, Ameya.................................................    76
    Rothstein, David.............................................    81

              Additional Material Submitted for the Record

Perlmutter, Hon. Ed:
    Written statement of the American Bankers Association........   117
    Written statement of the American Financial Services 
      Association................................................   130
    Written statement of the Bank Policy Institute...............   132
    Written statement of the Center for Responsible Lending......   140
    Written statement of the Consumer Bankers Association........   142
    Written statement of the Electronic Transactions Association.   144
    Written statement of the Independent Community Bankers of 
      America....................................................   148
    Written statement of the National Association of Federally-
      Insured Credit Unions......................................   153
    Written statement of Prosperity Now..........................   155
Kustoff, Hon. David:
    Written statement of the Consumer Bankers Association........   142

 
                    BANKING THE UNBANKED: EXPLORING
                  PRIVATE AND PUBLIC EFFORTS TO EXPAND
                     ACCESS TO THE FINANCIAL SYSTEM

                              ----------                              


                        Wednesday, July 21, 2021

             U.S. House of Representatives,
                Subcommittee on Consumer Protection
                        and Financial Institutions,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2128, Rayburn House Office Building, Hon. Ed Perlmutter 
[chairman of the subcommittee] presiding.
    Members present: Representatives Perlmutter, Scott, 
Velazquez, Sherman, Green, Foster, Vargas, Lawson, Pressley, 
Torres; Luetkemeyer, Posey, Barr, Williams, Loudermilk, 
Kustoff, Rose, and Timmons.
    Ex officio present: Representatives Waters and McHenry.
    Also present: Representatives Tlaib and Ocasio-Cortez.
    Chairman Perlmutter. The Subcommittee on Consumer 
Protection and Financial Institutions will come to order. 
Without objection, the Chair is authorized to declare a recess 
of the subcommittee at any time. Also, without objection, 
members of the full Financial Services Committee who are not 
members of this subcommittee are authorized to participate in 
today's hearing.
    Today's hearing is entitled, ``Banking the Unbanked: 
Exploring Private and Public Efforts to Expand Access to the 
Financial System.''
    I now recognize myself for 4 minutes to give an opening 
statement. At the start of the pandemic a constituent of mine 
reached out to my office. We can call her, ``Mrs. 
McGillicuddy.'' Mrs. McGillicuddy did not have a bank account, 
so she received her Social Security benefits in the form of a 
direct express debit card. After the CARES Act passed, the 
first wave of economic impact payments went to Americans with a 
bank account on file with the IRS. So, Mrs. McGillicuddy had to 
wait. When she finally did receive the paper check, Mrs. 
McGillicuddy was forced to find a check cashing service where, 
for a fee, she could cash the check. Compare that with the 
experience of folks who had an account linked to the IRS. They 
got the payments first, and for free.
    One recent report estimates that CARES Act economic impact 
payment recipients spent $66 million just to cash the first 
round of checks. According to an FDIC survey, the number-one 
reason why Americans didn't have bank accounts was because they 
didn't have enough money to meet a bank account's minimum 
requirement. This is one example of how expensive it is to be 
poor in the richest country in the world.
    As of 2019, one in five Americans was unbanked or 
underbanked, and 5.4 percent or about 18 million Americans do 
have not access to a bank account at all. An additional 16 
percent or about 53 million Americans have access to a bank 
account, but also rely on alternative financial services such 
as money orders, check cashing, payday loans, or other services 
in place of traditional banking.
    There is also a significant racial disparity in access to 
banking services. Latino households are more than twice as 
likely to be unbanked or underbanked. And African-American 
households are more than 3 times as likely to lack access to 
traditional banking services compared to White households.
    For the country with the most powerful economy in the 
world, these statistics are unacceptable. However, I will also 
note that this data was gathered before the pandemic and sharp 
rising unemployment. Historically, unbanked and underbanked 
rates are correlated to unemployment, so the true numbers may 
be worse. If we want the economic recovery to be inclusive and 
reach every community, we need to make sure people stop being 
penalized for not being born on third base.
    Today's hearing will examine trends in unbanked and 
underbanked households, challenges to improving access to 
banking services, and proposals to expand the availability of 
safe and affordable financial services for everyone in every 
community. Ensuring every American has access to a safe and 
affordable bank account will make our economy stronger, protect 
vulnerable consumers, and make our nation better prepared to 
confront a national emergency.
    With that, I now recognize the ranking member of the 
subcommittee, Mr. Luetkemeyer from Missouri, for 4 minutes for 
his opening statement.
    Mr. Luetkemeyer. Thank you, Mr. Chairman. And thank you for 
having this hearing today. I would also like to thank the 
witnesses for being here today and agreeing to testify.
    The topic we are discussing today is extremely important, 
because getting more people in the banking system can have a 
drastic impact on their lives. Not only do banks provide a safe 
and protected way to store money, banking services generally 
provide consumers with cheaper financial services than other 
businesses involved in finance. For example, most banks offer 
free checking accounts, check cashing, and deposits. Many offer 
wire transfers at a cheap flat rate, but most allow cash 
withdrawals at your financial institution for free.
    Not only are these day-to-day services critical, but having 
an existing account at a financial institution assists in 
access to credit for both consumers and businesses. Look no 
further than the pandemic, where we saw financial institutions 
participating in the Paycheck Protection Program (PPP). In 
addition, individuals with a bank account found it much easier 
to get their economic impact payment from the IRS. I am sure 
all of the Members here today have dealt with constituents 
without a bank account who are still struggling to get this 
money from the IRS.
    Since 2009, the FDIC has surveyed and examined how American 
households are using banking services. The latest survey from 
2019 shows the lowest estimate of unbanked households since the 
survey started. In fact, the household unbanked rate has 
consistently fallen since 2011. This progress means that 3.7 
million households in the United States have joined or rejoined 
the banking system since 2011, an accomplishment that could be 
accelerated at the same time it is examined to ensure that 
progress is maintained.
    So, what has worked and what has not worked in driving down 
the unbanked rate? It is clear that the progress made since 
2011 happened without a government takeover of the financial 
system--3.7 million households joined the banking system 
without the Federal Reserve offering checking accounts, without 
the Post Office acting as a financial institution, and 
certainly without the Consumer Financial Protection Bureau 
(CFPB) taking over the credit reporting industry.
    According to the FDIC, the single biggest factor that 
lowered the unbanked rate was improvement in the social and 
economic circumstances of a household. Put simply, the pro-
growth policies of the Trump Administration led to improved 
circumstances for all Americans, and according to the FDIC, 
drove 2.4 million households into the banking system.
    There are also many noneconomic factors to consider when 
discussing the unbanked population. For example, 16 percent of 
unbanked households listed, ``not trusting banks,'' as their 
main reason for not having a bank account. In addition, among 
unbanked households, 56 percent were not at all interested in 
even having a bank account.
    Despite these difficulties, financial institutions and 
stakeholders are looking at ways for private industry to bridge 
the unbanked gap in this country. The FDIC recently started 
GetBanked, a public awareness campaign to inform and inspire 
consumers to join the banking system.
    Furthermore, the Cities for Financial Empowerment (CFE) 
Fund has partnered with financial institutions around the 
country in the Bank On initiative, which offers low-cost 
accounts for consumers. Raising awareness and increasing 
innovation will be critical to lowering the unbanked and 
underbanked gap in this country.
    Congress should be looking to support new ways to provide 
traditional banking services that reach the unbanked 
population, to provide regulatory clarity for new technologies 
in the marketplace providing financial access, and lastly 
should not get the government involved in providing banking 
services to consumers.
    I look forward to the discussion of these topics with the 
witnesses today. And with that, Mr. Chairman, I yield back.
    Chairman Perlmutter. Thank you, Mr. Luetkemeyer.
    The Chair now recognizes the Chair of the full Financial 
Services Committee, the gentlewoman from California, Chairwoman 
Waters, for 1 minute.
    Chairwoman Waters. Thank you, Chairman Perlmutter. I am 
pleased that this hearing focuses on access to banking 
services, especially for communities in banking deserts. 
Without a nearby branch to go to in the Los Angeles area, the 
rate of unbanked households is higher than the national rate. 
And the unbanked are disproportionately lower-income households 
of color.
    Having access to a bank account is fundamental to financial 
security. Millions of Americans who did not have a bank account 
during this pandemic had to wait weeks or months to receive 
stimulus checks while they struggled to afford housing, to take 
care of their loved ones, and to otherwise make ends meet. The 
Wall Street megabanks have mistreated unbanked individuals for 
long enough. Our constituents in California, Colorado, New 
York, and across the country are fed up, and are advocating new 
consumer center solutions, such as no-fee FedAccounts and 
public banking.
    I look forward to the testimony from our witnesses. And I 
yield back the balance of my time.
    Chairman Perlmutter. The gentlelady yields back. I would 
now like to recognize the ranking member of the Full Committee, 
the gentleman from North Carolina, Mr. McHenry, for 1 minute.
    Mr. McHenry. Thank you, Mr. Chairman. Today's hearing is 
another example of Democrats using the financial system to 
score points with progressive activists. We are talking about a 
very important issue, but the bills attached to this hearing 
are much more of a partisan wish list than they are about the 
substance of driving financial inclusion. Look at the 
politically motivated move last month to take down the True 
Lender bill, that makes things less clear, less certain about 
bank and Fintech partnerships.
    We know that Democrats want to drive a government-centric, 
government-run financial system, a one-size-fits-all approach 
which will not drive financial inclusion. I can tell you this: 
The Federal Government is not innovative. It is not nimble. And 
it will not increase financial inclusion. We can drive 
financial inclusion with banks and Fintechs working together, 
and provide consumers and small businesses with greater access 
to affordable financial products and services, especially those 
in underserved and rural areas. It is innovation, not a cudgel 
that will drive financial inclusion. That should be the subject 
of today's hearing, not the list of bills attached to this 
hearing.
    I yield back.
    Chairman Perlmutter. The gentleman yields back.
    I am now pleased to welcome each of our witnesses. We have 
five excellent witnesses today. First, Ms. Mehrsa Baradaran. 
She is a professor of law with the University of California 
Irvine School of Law. Professor Baradaran's focus includes 
firnancial inclusion, inequality, and the racial wealth gap.
    Second, Ms. Deyanira Del Rio, who is the co-executive 
director of the New Economy Project. Ms. Del Rio has worked for 
more than 20 years on cooperative finance, immigrants' economic 
rights, and equitable neighborhood development.
    We have them both virtually attending today's hearing, so 
thank you very much.
    In the committee room, we have Mr. Ameya Pawar, a senior 
fellow at the Economic Security Project. Mr. Pawar is a former 
alderman of Chicago's 47th Ward, and is working on efforts 
around guaranteed income, and public options in financial 
services.
    We also have Mr. David Rothstein, a senior principal with 
the Cities for Financial Empowerment (CFE) Fund. Mr. Rothstein 
leads the CFE Fund's work on the Bank On initiative through 
account certification and coordination among stakeholders.
    And finally, we have Mr. John Berlau, a senior fellow with 
the Competitive Enterprise Institute. Mr. Berlau focuses on 
public policy affecting access to capital, entrepreneurship, 
and investments. And he is also a contributing writer for 
Forbes.
    Thank you all for being present today. You are reminded 
that your oral testimony will be limited to 5 minutes. You 
should be able to see a timer on the desk or on the screen that 
will indicate how much time you have left. When you have 1 
minute remaining, a yellow light will appear. And I would ask 
you to be mindful of the timer, and when the red light appears, 
to wrap up your testimony so we can be respectful of both the 
other witnesses' and the committee members' time.
    And without objection, your written statements will be made 
a part of the record.
    Professor Baradaran, you are now recognized for 5 minutes 
for your testimony.

STATEMENT OF MEHRSA BARADARAN, PROFESSOR OF LAW, UNIVERSITY OF 
                CALIFORNIA IRVINE SCHOOL OF LAW

    Ms. Baradaran. Thank you so much, Chairman Perlmutter, 
Ranking Member Luetkemeyer, and members of the subcommittee. 
Thank you for the opportunity to testify on this very important 
issue.
    The burdensome costs faced by millions of Americans 
excluded from the nation's banking system are not new, but the 
stakes have gotten higher over the last decade as digital 
banking has become essential to full participation in the 
economy.
    The recent COVID crisis further exposed the inequalities 
embedded in the nation's credit and payment system and revealed 
the urgency for reform. I have a few recent examples. When 
Congress acted decisively on behalf of Americans to send the 
first and second rounds of COVID relief to struggling 
households, many unbanked and underbanked Americans, the 
population most in need of help, either did not receive 
payments, or had to pay fees to collect from ATMs or tax 
preparers. And many stood in long lines exposing themselves to 
the virus, and that is to lower ATM fees.
    Just recently, as Congress and the Administration acted 
once again to send child tax credits, reports estimate that 
about one in five families whose accounts are not linked to the 
IRS database will have to jump through hoops to get these 
checks, or pay fees, or never get the checks at all. This takes 
time, stress, and a lot of money. It has been a blockbuster 
year for banks. And they have collected over $31 billion in 
revenue from fees alone. And remember, the Americans living on 
the thinnest of margins pay the majority of the bulk of these 
fees.
    One out of 11 Americans spent $350 or more a year in 
overdraft fees. That is a lot of money for families living on 
the margins. Overdraft is one of the many reasons why it is 
expensive to be poor in America. In fact, Black communities, 
Native-American communities, rural communities, and the 
elderly, those already living on the margin, pay the most 
because they lack access to the nation's payment system. This 
is not a problem of technology; it is a problem of policy. In 
fact, I want to propose that we need not get bogged down in 
complexity. The problem is straightforward. And I believe the 
solution is also simple, which is usually not the case with 
policy. The problem is this: The U.S. payment system is only 
available to banks and their customers. If you are outside of 
it, you have to pay a toll to use it. I urge Congress to open 
up these tracks on which our nation's commerce runs to 
everybody.
    Congress need not reinvent the wheel. Congress already 
created a public payment system, the Federal Reserve. The Fed's 
explicit charter is to serve the public interest and to 
increase the integrity, efficiency, and equity of the U.S. 
payment system. That was the mandate Congress gave it. I urge 
Congress to ensure that everyone has equal access to this vital 
public utility. I believe that the most effective way to do 
this is through a partnership between the Treasury, the Federal 
Reserve, and the postal banking system.
    The Treasury already maintains a relationship with 
Americans through the IRS and the benefits infrastructure. 
Instead of using a middleman to send checks, it can route those 
payments through the Post Office, whose budget is actually 
linked to the Post Office, and the Post Office has historically 
been a bank in America and abroad.
    On the consumer side, what this would look like is you 
would go to your local Post Office, deposit your money, and 
take cash out of the ATM without fees, set up automatic bill 
pay to online or mobile banking, get a debit card to use when 
you are out shopping or online, or link up to a digital 
account, or a Fintech app. In fact, across the world, postal 
banks more people than the Fintech industry or private banks, 
and crucially, it allows many of the people to connect to 
others digitally.
    Digital banking is essential to modern commerce. But to 
truly reach the unbanked and underbanked, you need a physical 
location, the ability to deposit your cash wages and take out 
cash to pay for goods. This is the first crucial step to 
financial inclusion. This is because between 20 and 40 million 
Americans don't have broadband internet access. Many Americans 
do not have the mobile devices or computers, including elderly 
Americans.
    Most low- and moderate-income (LMI) communities still 
operate at least some portion of finances in cash. They receive 
wages in cash, or have to use cash to buy groceries or fresh 
fruit, or to pay babysitters or rent. Research showed that for 
the vast majority of Americans with an income of less than 
$50,000, they prefer just a simple debit card, and don't have 
that.
    Why aren't banks serving these consumers? Over the past 10 
years, as banks have become bigger and more profitable, 93 
percent of bank branch closings were in LMI communities. Rural 
Americans have lost over half of their banks. Banks don't serve 
these communities for the simple reason that there aren't 
enough profits. So, we can either try to keep coaxing the 
industry through carrots and sticks, or simply offer services 
directly through public banks. In fact, as banks have deserted 
many of these low-profit ZIP Codes, the Post Office has 
remained, in accordance with its public mission.
    The Post Office has over 33,000 branches, and most of their 
branches are in low- or moderate-income communities, and 
Americans know it. Recent surveys showed that the Post Office 
is actually number-one in America's most-trusted brand to do 
what is right. And this is because the Post Office, in 
accordance with what President George Washington inscribed into 
law in 1792, has a very public service mission.
    In conclusion, the Post Office is already a public 
institution, it has a legacy of being a public bank in the 
U.S., and it can do so again, making the lives of many 
Americans a little easier and less expensive.
    Thank you. Sorry for going over.
    [The prepared statement of Professor Baradaran can be found 
on page 50 of the appendix.]
    Chairman Perlmutter. Thank you, Professor.
    Ms. Del Rio, you are now recognized for 5 minutes.

   STATEMENT OF DEYANIRA DEL RIO, CO-EXECUTIVE DIRECTOR, NEW 
                        ECONOMY PROJECT

    Ms. Del Rio. Thank you. Good morning, Subcommittee Chairman 
Perlmutter, Ranking Member Luetkemeyer, and members of the 
subcommittee, as well as Committee Chairwoman Waters. Thank you 
so much for the opportunity to testify today on behalf of the 
New Economy Project, an economic justice organization based in 
New York City.
    For 26 years, our organization has worked with community-
based organizations and low-income New Yorkers to combat 
persistent redlining, predatory lending, and other inequities 
in our financial system and economy that serve to perpetuate 
racial wealth inequality, neighborhood segregation, and 
poverty. We work with community groups now to advance public 
banking and strengthen community development financial 
institutions (CDFIs), and to undertake other strategies that 
democratize control over finance, land, housing, and other 
sectors of our economy.
    My comments today are also informed by my role as board 
chair of the Lower East Side People's Federal Credit Union, 
which is a U.S. Treasury-certified Community Development 
Financial Institution, or CDFI, that has 35 years of experience 
serving historically redlined communities across New York City.
    My testimony today will address ways in which our current 
financial system serves to extract rather than build wealth, 
and the need to strengthen and enforce laws to hold banks and 
other financial institutions accountable to people and 
communities. At the same time, we must focus on creating public 
banks and other institutions and infrastructure that can build 
community wealth and serve the public interest.
    First, I want to say, underscoring what you have heard 
already, that barriers to banking access that this subcommittee 
is addressing in today's hearing are long-standing and systemic 
in nature. They, therefore, call for bold and systemic 
solutions. Congress and the Federal banking regulators can and 
should take comprehensive action to address persistent 
redlining, discriminatory identification policies, predatory 
overdraft fees, and other barriers that block or actively drive 
the working poor and people of color out of our banking system.
    At the same time, we must combat the notion that financial 
innovation, or financial products and credit in particular, are 
solutions to entrench poverty and inequality. To give you one 
example, we have, across the country in the United States, 400-
percent APR payday loans that extract wealth from working-poor 
families. Their solution, the antidote to these injurious loans 
is not to develop less predatory short-term loans, but rather 
to ensure access to living wage jobs, truly affordable housing, 
strength in safety nets, and other measures that address root 
causes of economic insecurity.
    And finally, we need fundamental change in new institutions 
to create a financial system and an economy that works for all. 
I am especially pleased to share our organization's work in New 
York City and State to advance local public banks, which we see 
as critical to fostering strong local economies and adjust 
recovery.
    Public banking is common throughout the world, and on the 
rise across the United States. Public banks are financial 
institutions owned by public entities like a city or a county 
that hold public deposits and are chartered to serve the public 
good, rather than in the interest of private, profit-seeking 
shareholders.
    Through public banking, local governments, like ours in New 
York City, can build on what is working in our financial 
system, partnering with CDFIs and other community-based lenders 
to expand fair banking access, and to deepen investment in 
affordable housing, small businesses, renewable energy, and 
other critical infrastructure.
    Public banks also allow local governments to control their 
money, our public money, and to move it out of banks that 
engage in redlining and predatory financial practices, and that 
finance fossil fuels extractions, real estate speculation and 
displacement, and other activities that harm local communities 
and run counter to our public policy goals.
    New Economy Project is coordinating two broad-based 
coalitions in New York to advance public banking. We are 
advocating for passage of State legislation, the New York 
Public Banking Act, that would create a safe and appropriate 
regulatory framework for cities, counties, and regions that 
want to establish public banks.
    This legislation has gained massive traction, with 65 
legislative cosponsors and broad-based support from more than 
100 community and labor organizations, and New York-based CDFIs 
and responsible lenders.
    The Federal Public Banking Act would be a game changer to 
local endeavors like ours by providing technical assistance and 
grants to support the formation of mission-driven public banks, 
to give local public banks access to the Federal Reserve's 
payment systems and create other frameworks of support. Public 
banking would serve as an especially powerful tool as cities 
and States throughout our country work to advance a just 
recovery from our pandemic, and to withstand future crises.
    We have seen that countries which have public banks are 
significantly more resilient in the face of crises than those 
without them. And that is precisely because local public banks 
invest in sectors that provide direct economic, social, and 
environmental benefits. And in the context of the growing and 
interrelated crises we face--health, housing, racial 
inequality, and climate crises--we believe the Federal 
Government must take bold action to support these efforts and 
transform [inaudible].
    Thank you, again, for the opportunity to testify.
    [The prepared statement of Ms. Del Rio can be found on page 
69 of the appendix.]
    Chairman Perlmutter. Thank you, Ms. Del Rio.
    Mr. Pawar, you are now recognized for 5 minutes.

  STATEMENT OF AMEYA PAWAR, SENIOR FELLOW, ECONOMIC SECURITY 
                            PROJECT

    Mr. Pawar. Thank you, Chairman Perlmutter, Ranking Member 
Luetkemeyer, and members of the subcommittee. My name is Ameya 
Pawar, and I am a fellow with the Economic Security Project in 
the Open Society Foundations, where I work on guaranteed income 
and public banking policy. These are both issues that were very 
different just a few years ago when I started working on them, 
when I was on the City Council in Chicago, but have converged 
over the last 18 months as a result of the global coronavirus 
pandemic. I will get to that in just a moment.
    It is an honor to be here, and I am here to express my 
support for FedAccounts and public banking, not one or the 
other, but both. And the reason why is that they are both 
market-based solutions to solve widespread financial exclusion. 
At a very basic level, every person, every small business, 
needs a bank account to receive money, to deposit earnings, to 
save, to pay bills, and to be able to do so without paying 
exorbitant fees or extraction.
    And then, people and small businesses need access to 
wealth-creating loans, home and business loans. These loans are 
the foundation of economic development in this country, loans 
that banks make, make banks sort of a public policymaker when 
they decide who gets money, who gets loans, and who doesn't.
    And today, we have widespread economic exclusion, where 25 
percent of Americans are unbanked or underbanked. And they are 
paying up to 10 percent of their incomes annually to be able to 
access basic financial services. So what we have is a system 
where the more money you make, the cheaper it is to manage your 
money. And the less money you make, the more expensive it is to 
manage your money. And the more money you make, the cheaper it 
is for you take out loans and create additional wealth. The 
less money you make, you are prohibited from taking out those 
wealth-creating loans.
    FedAccounts would bring millions of people into the banking 
system who currently are excluded. It would restore trust in 
the system and make it possible for them to carry out their 
financial affairs. On the other hand, the Public Banking Act is 
transformational because it allows counties, cities, and States 
to set up public banks that can channel capital to small 
businesses that could originate micro mortgages and loans for 
first-time home buyers, and it could finance new public options 
for housing, childcare, and broadband, all of which are market-
based additions to the existing economy, and all of which are 
necessary as part of a healthy market.
    I started working on both of these issues when I was coming 
to an end of my second term at the City Council. When I first 
got there 10 years ago, I thought the best way to combat 
inequality and poverty was to pass legislation and reform 
government programs, so I worked on efforts with my colleagues 
to raise the City's minimum wage, provide guaranteed paid sick 
leave, and combat wage theft. I worked on reforms on tax 
increment financing, I worked on Opportunity Zones. I 
interfaced with philanthropy and other government grants. And 
what I found was that all of this work, just worked on the 
margins; it wasn't enough to drive economic development in 
communities. It was necessary and critical work to lift wages, 
but if you raise your wages and it costs you money to cash your 
paycheck, if it costs you money to pay your bills, if you don't 
have a bank account to save, and you have no access to wealth-
creating loans, you are basically giving people a weighted life 
jacket.
    And to me, in my mind, that is why what we need are basic 
bank accounts and access to wealth-creating loans. And that is 
why both of these pieces of legislation are important. The 
other thing I might add is that banks, when they choose to 
serve a community or choose to deny a community, that is an act 
of public policy.
    You see, when banks systemically lend within the community 
to homeowners and businesses, that broadens the tax base. That 
increases property values. That increases property tax 
revenues. And when you do that systematically over and over 
again, more people buy homes, more people open businesses, and 
that creates a healthy economy. When you deny communities 
that--we all have driven through communities that are littered 
with payday loan centers, and currency exchanges, and tax prep 
centers. There are also communities where you see less tax 
revenue, lower property values, and so on and so forth.
    So when banks decide to choose to serve a community, they 
are exercising public policy. And I just think it is worth 
asking ourselves, should this much policymaking power be 
concentrated in the hands of a few, or should we create a 
healthy market with public options such that everyone has 
access to a bank account and wealth-creating loans to drive 
economic development?
    Thank you.
    [The prepared statement of Mr. Pawar can be found on page 
76 of the appendix]
    Chairman Perlmutter. Thank you, Mr. Pawar.
    Now, I recognize Mr. Rothstein for 5 minutes for his 
testimony.

  STATEMENT OF DAVID ROTHSTEIN, SENIOR PRINCIPAL, CITIES FOR 
                FINANCIAL EMPOWERMENT (CFE) FUND

    Mr. Rothstein. Thank you, Chairman Perlmutter, Ranking 
Member Luetkemeyer, and members of the Subcommittee on Consumer 
Protection and Financial Institutions. My name is David 
Rothstein. I am a senior principal with the Cities for 
Financial Empowerment Fund, known as the CFE Fund, where I lead 
the national Bank On initiative.
    The CFE Fund's mission is to work with municipal and other 
partners to provide financial empowerment programs and services 
on a large scale, and our work spans across more than 100 city, 
county, and even State Governments.
    Our Bank On program harmonizes financial institutions of 
all sizes and types, local government, nonprofit partners, and 
consumer advocates together through a national product 
certification program with the goal of bringing unbanked and 
underbanked households into safe, affordable, and fully 
transactional bank and credit union accounts. On behalf of the 
more than 100 financial institutions with certified Bank On 
accounts, and our 90-plus coalitions around the country, I am 
honored to testify today about how Bank On is here to meet the 
moment you are so admirably prioritizing here.
    Bank On is a success on a number of measurable levels. 
Eight years ago, we established the first-ever national account 
standards, with close consultation with regulators like the 
FDIC, advocates, financial institutions themselves, local 
elected officials, and community organizations. These standards 
directly addressed principal concerns like overdraft and 
insufficient fund fees.
    We started with the four largest banks in the country 
having certified products, but have quickly grown to 110 banks 
and credit unions. In fact, certified accounts can now be found 
in 40 percent of all of the branches in the United States. 
Banks offering a Bank On certified account represent more than 
51 percent of the deposit market share, according to the FDIC. 
And more than two dozen of these accounts can be opened online 
by new customers, further expanding that access to rural and 
urban neighborhoods that don't have branches in their 
communities.
    The market for Bank On accounts is thriving. Led by our 
partners at the Federal Reserve Bank of St. Louis, the Bank On 
National Data Hub finds that these accounts are extremely 
popular, and the market is really robust. In 2019, nearly 2 
million Bank On certified accounts were opened in that year 
alone. We also know that more than 85 percent of new account 
openings were completely new clients to the financial 
institution, a strong proxy for banking access.
    We know that Bank On is helping the unbanked in the 
hardest-to-reach markets. The FDIC finds that households of 
color are 5 times less likely than White households to have a 
bank account. A recent analysis by the Bank Policy Institute 
found that more than 60 percent of Bank On accounts opened were 
in neighborhoods with more than 50-percent minority population. 
The widespread availability of Bank On certified accounts is, 
of course, only part of the banking access equation. It is 
connecting people to these accounts that makes the difference.
    The Bank On equation looks for ways to integrate banking 
access into large-scale funding streams. And our 90 Bank On 
coalition partners help make that happen in their communities. 
Almost two dozen cities, for example, incorporate Bank On 
account opening into summer youth employment programs, and the 
ability to rely upon the national account standards assures 
those government leaders that these are the right accounts and 
that they are safe.
    Led in partnership by our Bank on Maryland Coalition, the 
State of Maryland now facilitates Bank On account opening for 
unemployment benefits. And now, the Treasury Department and the 
IRS have been facilitating Bank On account openings, in 
partnership with the robust efforts of the FDIC, with 
facilitating account opening as a way to get both the economic 
impact payments, and now the advanced child tax credit payments 
as well.
    All of this is to say that while we are thrilled that 
policymakers and agencies are interested in widespread banking 
access, Bank On is demonstrating today, right now, both that 
you can get institutions to offer the right accounts and that 
people will open them by the millions each year. Why create a 
separate but equal system that would be incredibly complex and 
take years to produce? Why ignore this very tangible solution 
rather than amplify it?
    Thank you for your time, and I am more than happy to answer 
any questions that the committee has going forward. Thank you, 
again.
    [The prepared statement of Mr. Rothstein can be found on 
page 81 of the appendix.]
    Chairman Perlmutter. Thank you, Mr. Rothstein.
    Mr. Berlau, you now are recognized for 5 minutes.

STATEMENT OF JOHN BERLAU, SENIOR FELLOW, COMPETITIVE ENTERPRISE 
                        INSTITUTE (CEI)

    Mr. Berlau. Chairman Perlmutter, Ranking Member 
Luetkemeyer, and honorable members and guests of the 
subcommittee, thank you for this opportunity to present 
testimony on behalf of my organization, the Competitive 
Enterprise Institute (CEI), at this hearing on the vital topic 
of financial inclusion. CEI is a Washington-based, free-market, 
public-policy organization founded in 1984 that studies the 
effects of regulations on job growth and economic well-being. 
At CEI, we have championed private-sector innovation that 
promotes financial inclusion, and warned about government red 
tape that contributes to the problem of the unbanked.
    We sounded the alarm about Section 1075 of the Dodd-Frank 
Act also known as the Durbin amendment, interchange fee cap 
that transferred, through price controls, much of the cost of 
the processing of debit cards from retailers, including very 
large retail chains, to some of the nation's poorest consumers.
    We pointed out that largely as a result of this measure, 
the percentage of free, non-interest checking accounts, which 
was 76 percent in 2009, went to just 39 percent in 2012. And a 
George Mason University professor's study found that that may 
have resulted in more than 1 million being unbanked.
    In the last few years, there has been progress in more 
Americans being part of a banking system, but there is still 
much further to go. The good news is that both Fintech firms 
and community banks and credit unions are producing remarkable 
innovations. The government has a role in ensuring clear 
disclosure and swift punishment of fraud, but should otherwise 
refrain from either heavy-handed regulation or the creation of 
State-owned financial service entities that could smother and 
crowd out this innovation.
    Of the bills being discussed today, I can say I support the 
approach of the Expanding Financial Access for Underserved 
Communities Act, that lifts regulatory barriers to individual 
credit unions that decide it would make good business sense to 
add underserved customers, based on their mission of service.
    But while the credit union bill is a bottom-up approach to 
financial inclusion, the other two offerings are top-down 
approaches that would worsen the lot of the unbanked, as well 
as many other American consumers of the financial system. The 
Access to No-Fee Accounts Act is a version of what has been 
called FedAccounts, in which the Federal Reserve would directly 
compete with banks and credit unions to provide deposit 
accounts to consumers. This approach raises a host of problems 
involving privacy data security, crowding out private-sector 
innovation, and depriving banks and credit unions of deposits 
necessary to make loans.
    The approach of the Public Banking Act of 2021 raises 
similar concerns to FedAccounts, plus has uniquely troubling 
aspects of its own, such as risk to the taxpayers who would 
provide basically Federal guarantees to State-owned banks of 
various jurisdictions. But perhaps, the biggest concern of this 
particular bill is that financial exclusion, rather than 
inclusion of a legal industry is one of its stated goals. The 
bill prohibits banks with charters from providing loans to 
making investments in and basically providing any financial 
services incidental to a fossil fuel project.
    Now ironically, the State-owned bank of North Dakota, which 
has been touted as an example by some witnesses, would be 
disqualified as a covered bank under this bill, because it 
provides financing for drilling and fracking in the oil-rich 
region of the State. My colleagues and I have been consistent 
in saying that government officials should not use the banking 
industry to lodge indirect attacks on industries they disfavor.
    We support the SAFE Banking Act sponsored by Chairman 
Perlmutter, to prevent the Federal Government from punishing 
banks and credit unions that deal with marijuana businesses in 
States where it is legal.
    And we applaud Ranking Member Luetkemeyer's efforts to 
uncover and then end Operation Choke Point, in which various 
Federal agencies pushed banks to cut off businesses ranging 
from guns to small-dollar lenders.
    CEI believes that in all transactions involving 
controversial but legal industries, individual financial firms 
should be allowed to make their own assessments of reputational 
risks.
    We also believe a competitive market, free of heavy-handed 
regulation and State-backed entities that would suppress 
innovation and do other harms is one where all types of 
entrepreneurs create products and services for all types of 
consumers, enabling a financial system and economy that is both 
dynamic and inclusive. Thank you for inviting me to testify. I 
look forward to your questions.
    [The prepared statement of Mr. Berlau can be found on page 
63 of the appendix.]
    Chairman Perlmutter. Thank you very much, Mr. Berlau.
    I will now recognize myself for 5 minutes for questions. 
And Mr. Rothstein, I want to start with you. Based on some 
comments Mr. Pawar, Ms. Del Rio, and Professor Baradaran made 
about how expensive it is to be poor in America with overdraft 
fees, and high interest rates, and just fees generally. And 
nobody even talked about parking tickets. If you add up all of 
these things, it is tough for people who don't have much in the 
way of resources.
    You stated that more than 100 financial institutions now 
offer Bank On certified accounts, but that is only a small 
fraction of the total number of depository institutions in the 
country. What obstacles do financial institutions face in 
offering Bank On certified accounts? And what is CFE Fund's 
strategy for continuing its expansion of the program?
    Mr. Rothstein. Thank you for that question, Mr. Chairman. 
The first thing I would say is that the growth is very fast-
paced. Back in October, November, we were at about 50 banks and 
credit unions offering accounts. Now, there are more than 100 
currently offering them. And as I mentioned, those financial 
institutions make up about 40 percent of the branches in this 
country, so it is a significant part of the banking 
infrastructure that have accounts available.
    I think what the obstacles used to be and what we really 
worked hard on are, first, to make sure that there was one ask 
of financial institutions when it came to checking accounts. I 
think early on, there were multiple asks by many different 
partners, whether was government officials or community groups. 
And so, the Bank On ask is one ask, it is one account. It can, 
obviously, have other accounts in their suite of accounts, but 
the Bank On account is one very specific checking account that 
is fully functional.
    The other piece was that there were resource issues, too. I 
think financial institutions thought that creating this type of 
account would be challenging and hard, especially some of the 
smaller financial institutions. The partnerships with the 
American Bankers Association, as well as the largest core 
processors in the country, have provided resources and help for 
financial institutions to create these accounts. And, so, those 
partnerships, in addition to the partnerships with regulators 
like the FDIC, who had provided advice on language changes and 
compliance issues, have been really helpful to the financial 
institutions.
    Chairman Perlmutter. Do the banks, or the credit unions, 
anybody who is offering a Bank On account, do they get any 
credit with the Community Reinvestment Act (CRA)? Or what 
incentives might also be there to provide these kinds of 
accounts?
    Mr. Rothstein. That is a great question. Thank you, Mr. 
Chairman. We do know that banks are getting CRA credit for 
these accounts. Certainly, one improvement, and we did submit 
comments on the recent request for comments on CRA, would be to 
have a more established prominent role for receiving CRA 
credits for offering Bank On accounts. For obvious reasons, CRA 
focuses a good bit on lending, but we absolutely believe that 
bank accounts matter, and so that would be a big part of this.
    Chairman Perlmutter. Mr. Pawar, 83 percent of bank 
respondents reported visiting a bank branch in person in 2019. 
In your testimony, you described how Chicago has lost a 
significant number of bank branches over the last decade. Can 
you describe the importance of a physical bank branch location 
and its impact on lending in serving hard-to-reach communities?
    Mr. Pawar. Thank you for that question, Mr. Chairman. There 
are two problems connected with this. One, in Chicago we have 
lost over 200 bank branches in the City, primarily in lower-
income communities and communities of color. So, there is the 
physical access to a branch that is incredibly important.
    And then, there are lots of communities in Chicago and 
around the country that have banks, but the banks just don't 
serve the communities that they reside in. And so, we have two 
problems really to solve, which is, one, we need banks to be 
able to serve people, and then we need those banks to extend 
wealth-creating loans. The elegance of FedAccounts is this: It 
uses existing community banks as the conduit to extend those 
accounts. In other words, the Federal Reserve would hold these 
dollars, but the local community banks would be the conduit for 
those accounts. So this isn't a replacement of community or 
private banks; it is really an addition to the market.
    The other critical piece is that there are 21 million 
people who live in Census tracts that do not have a single bank 
or credit union. And that is where the Post Office can fit in 
and be the conduit for FedAccounts.
    Chairman Perlmutter. Thank you. My time has expired. I now 
recognize Mr. Luetkemeyer, the ranking member of the 
subcommittee, for 5 minutes.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    Mr. Berlau, your testimony caught my eye here with regards 
to, you believe that the Truth in Lending Act means to 
eliminate the use of APR for loans under a year length. I have 
been talking about this for a long time, these short-term 
loans. APR is not reflective of what the real cost is of a 
loan, and therefore, it is really deceiving to the customer. 
Would you like to talk about that?
    Mr. Berlau. Yes, thank you for that question. The great 
economist, Thomas Sowell, has said that if we measured the cost 
of hotels the way we did the cost of short-term loans, then a 
$100-a-night hotel room would be priced at $36,000, because 
that is how much it would cost if you said there 365 days, or 
360 days of the year. So, yes, it is really not appropriate 
when a loan that is taken out for 2 weeks or a month where the 
interest rate may be 30 percent, suddenly becomes 390 percent 
when you measure it according to APR.
    Mr. Luetkemeyer. Very good. Thank you for that.
    Mr. Pawar, according to the Cambridge dictionary, the term, 
``market-based,'' is defined as organized so that companies' 
prices and production are controlled naturally, by a supply and 
demand for goods and services rather than the government. You 
made a statement that public banking is based on market-based 
solutions. With this definition, explain what you just said 
there? How does that fit in that definition of allowing the 
production to be controlled naturally by supply and demand?
    Mr. Pawar. Thank you for that question.
    That definition doesn't exclude the fact that a publicly-
owned enterprise couldn't be a part of the market. For example, 
one of the most--
    Mr. Luetkemeyer. No, no. You said that, ``public banking is 
based on--is on market-based solutions.'' Market-based 
solutions to banking in public banking units. Have you ever 
been in a bank? Have you ever worked for a bank?
    Mr. Pawar. I have not.
    Mr. Luetkemeyer. You have not. Have you ever been a small-
business owner or a business owner at all?
    Mr. Pawar. No.
    Mr. Luetkemeyer. So, you have been in the academic world 
your entire life, or a think-tank world?
    Mr. Pawar. And I also served two terms on the City Council 
in Chicago.
    Mr. Luetkemeyer. Okay. It is really interesting--you said 
here that loans are public policy. If you ever worked in a 
bank, or understood how banking operates, sir, you would know 
that if the bank is not investing in its community, it is not 
going to grow. The bankers want the communities to grow, they 
want to invest in their communities, they want to make loans to 
the community. The loans they don't want to make are the ones 
where they don't believe the risk is worth the reward. The risk 
is worth putting their own assets at risk for whatever they 
want to make a loan for here.
    So, loans are not necessarily public policy. Loans are how 
you grow your community and grow the bank and the whole economy 
around you. Your misconception of what goes on in the banking 
industry is breathtaking for what you are trying to do here 
today.
    Ms. Baradaran, you talked about postal banking. And you 
made the comment that it's hard for banks to exist in rural 
areas because of low profit. Do you understand that Post 
Offices in rural America make no money; they lose thousands and 
thousands of dollars?
    Ms. Baradaran. Yes, sir. But as George Washington and 
Benjamin Franklin set up a Post Office, it cross-subsidizes.
    Mr. Luetkemeyer. No, you missed my point here. You missed 
my point. Your point was that it is difficult for banks to 
exist in rural areas because the amount of business is not 
necessarily enough to pay the bills. I can tell you, I live in 
a town of 336 people, and my Post Office had half of its 
service cut off. We are down to half-days now. And I can tell 
you that looking at the cost of each one of the rural Post 
Offices in my district, they lose money, between $50,000 and 
$250,000 a year. So, when you talk about having the Post Office 
provide services that are going to be wonderful for people, you 
are going to add to the deficit of their ability to do business 
and cost our country money.
    Ms. Baradaran. I think this is a way to help--
    Mr. Luetkemeyer. It is breathtaking, the lack of knowledge 
when you start talking about these issues, of how the real 
world operates. And it is very disappointing and very 
unfortunate.
    Mr. Chairman, I see my time has expired. With that, I yield 
back.
    Chairman Perlmutter. The gentleman yields back. The 
gentleman from Georgia, Mr. Scott, who is also the Chair of the 
House Agriculture Committee, is now recognized for 5 minutes.
    Mr. Scott. Thank you very much, Chairman Perlmutter. This 
is a very timely and very important hearing. I have been on 
this committee during my entire 19 years in Congress, and I 
have been working on this issue to find a solution. And we are 
making some progress. But we have a tremendous problem--many 
people don't know that out of our 50 States, their school 
systems, only 17 of those States offer a single course in 
financial education in their schools. We are way behind. I 
managed to get a bill passed 2 months ago, the Financial 
Inclusion in Banking Act, so we are making progress.
    But now, here we are faced with a real live-wire situation 
and that is this, we in Congress and the Biden Administration, 
Democrats and Republicans, we passed a bill that requires 
monthly payments for the job tax credit to 48 million families. 
Now, ladies and gentlemen, let me share with you how stark this 
problem is before us. We have this Child Tax Credit going out 
to 48 million families in this country. However, today, 14 
percent of these are Black families, 12 percent are Latino 
families, and 2 percent are White families. That comes to a 
total of 28 percent. So, we have the Child Tax Credit going out 
there to these people, millions of whom don't have a bank 
account. And they are subject to the predators--check cashers, 
payday lenders. And we have to find a way to get these 
individuals a bank account.
    Let me just ask you, Ms. Baradaran--I hope I pronounced 
that correctly.
    Ms. Baradaran. Perfect.
    Mr. Scott. Okay. What proposals, tell us, should Congress 
be considering to ensure that Black families, Latino families, 
and White families--and many of these in rural areas don't have 
it. They are not even connected to the internet, but we have a 
bill through the House Agriculture Committee to connect. But 
you see we have these things in motion. So, what do we need to 
do, Ms. Baradaran, to ensure that they are not left out of 
receiving this tax credit, months and months periodically away?
    Ms. Baradaran. Thank you. Thank you for the question. I 
want to say, first of all, the proposals surrounding public 
banking are really going to get to the core of some of these 
issues that affect our Black and Brown communities and Native-
American communities. These are historic injustices that have 
just compounded over time, just as interest does for capital. 
But I want to say, look, when we talk about markets in banking, 
it is a little bit of a misnomer, because the Federal 
Government provides the basic infrastructure for the banking 
system. And we give banks a charter, and they have a monopoly 
on payments and financial transactions and credit. So, if banks 
are not able to or are not making profits in rural communities, 
then we, as a democratic policy country, have to ensure this 
access.
    And so, I think one of the simplest solutions is the postal 
banking system, not because it has all of the bells and 
whistles, but because it has a historic legacy of doing it, and 
it is still in those areas. And this is a way to actually help 
the Post Office maintain some of the revenue in the area. So, 
my favored proposal for this particular topic is the Post 
Office. Thank you for the question.
    Mr. Scott. Thank you.
    And Mr. Rothstein, as someone with a deep knowledge of this 
initiative, how do you foresee the program reaching the 
millions of Americans who don't have access to a bank account? 
And I am including White families, too, not just Black 
families, not just Latino families. There are many White 
people, particularly in the rural areas; I deal with them all 
the time. How can we help these people get bank accounts?
    Mr. Rothstein. Thank you for the question. I think there 
are a few ways. The first is, as I mentioned, we have about 90-
plus coalitions around the country that are at the very local 
level working on this issue. They are trusted partners in this 
work. Whether they are out of a Treasurer's Office, the mayor's 
office, the United Way, whatever it might be, they are looking 
to find programs like the Child Tax Credit program where people 
are getting paid, or you need to make payments. Also, social 
services, wrap-around social services, so finding where people 
are at with trusted advisers and counselors.
    Chairman Perlmutter. Mr. Rothstein, I am going to have to 
cut you off. I'm sorry. The gentleman's time has expired.
    I now recognize Mr. Posey from Florida for 5 minutes.
    Mr. Posey. Thank you very much, Mr. Chairman.
    Mr. Berlau, what flaws or hurdles are there in public 
programs that private funding institutions don't have when 
reaching the underserved markets?
    Mr. Berlau. You said public programs, like FedAccounts?
    Mr. Posey. Yes. What flaws or hurdles exist in public 
programs that private financial institutions don't have when 
they are reaching the underserved markets?
    Mr. Berlau. I can just talk about their flaws as far as 
things that can hurt consumers. With FedAccounts, the Fed would 
have direct access to bank account info, and then, data 
security all stored in one place would be vulnerable to 
hacking, and other things. It displays also if the deposits are 
there, then the banks and credit unions would not have that 
money to make loans to small business.
    I also think there is sort of an inherent tension when you 
get to postal banking, municipal banking, that you are trying 
to both serve consumers and make a profit for the government--
or keep yourself afloat, and that is--I have heard this postal 
banking being justified as both rescuing the Post Office, and 
we need to provide lower rates to consumers. If you provide 
lower rates on borrowing, what does that do as far as the 
fiscal concerns of the Post Office? So that inherent tension 
there, like when you had postal banking, and it ended up that 
private banks were paying higher interest rates in the 1960s, 
which is finally the reason for its demise as far as the 
original postal savings program.
    Mr. Posey. Thank you.
    What are the benefits of increasing the participation rate 
of the population in financial institutions beyond the direct 
benefits to the individual?
    Mr. Berlau. Well, individuals would be able to build up 
savings, build wealth for themselves, invest that, or maybe 
build businesses for themselves. It would be very beneficial.
    Mr. Posey. Thank you. If banks leave a community, what do 
the people in the now-underserved community do when they need 
emergency funds? Who tends to fill the void there?
    Mr. Berlau. My organization has pushed for de novo banks 
and credit unions, that we need to approve more new banks, 
because I think retail banks and having banks and locations do 
matter. But more and more people do banking online in all 
sectors of income. So, I think there is just a combination of 
digital and having physical banks, as well as de novo banks, 
both online, digital, and the physical location, I think, 
really help fill that gap.
    Mr. Posey. Thank you. What has been happening in the free 
market with financial access and banking consolidation?
    Mr. Berlau. I think, a lot. Financial consolidation has 
been driven by some of the very costly mandates of the Dodd-
Frank Act. I have talked to some community banks and credit 
unions about things like the cost of the qualified mortgage and 
other things. But I think the good news is you are seeing 
Fintechs partner not just with large banks, but also with 
community banks to provide more access to credit, access to 
capital. And I think if you had some legal clarity about what 
banks could partner, who is the true lender, that would be very 
helpful.
    Mr. Posey. Okay. Thank you very much. I appreciate your 
frankness and the directness of your answers.
    Mr. Berlau. Thank you so much.
    Mr. Posey. Mr. Chairman, I see my time is about to expire, 
so I yield back.
    Chairman Perlmutter. Thank you.
    Mr. Posey yields back.
    The gentlelady from New York, Ms. Velazquez, who is also 
the Chair of the Small Business Committee, is recognized for 5 
minutes.
    Ms. Velazquez. Thank you, Mr. Chairman, and Mr. Ranking 
Member.
    Mr. Rothstein, one in four women and one in two trans 
individuals in the U.S. has been subject to severe physical 
violence by an intimate partner. And 48 percent of survivors do 
not have safe access to a bank account that is protected from a 
harm doer.
    First, how can we help ensure that Intimate Partner 
Violence (IPV) survivors can gain access to checking and saving 
accounts? And, second, how can we help ensure those accounts 
are protected from harm doers?
    Mr. Rothstein. Thank you for that question, Representative. 
It is an incredibly sensitive and important issue.
    I mentioned in my testimony that Bank On really works with 
coalitions as well as government partners to find places where 
people are making payments. The other piece which I should have 
mentioned also is on social services. Having bank account 
access for social services like this is critical.
    Survivors need choices. So they need things, not just, 
national accounts but local community bank accounts as well. 
They need to know that they are safe in terms of accessing 
their money and that the accounts are in their name only.
    They need to be able to open those accounts easily, so 
things like, Bank On requires for these accounts to have a low 
minimum opening deposit of $25 or less. They also need to know 
that everything is transparent, so if the account costs $3 a 
month, it is always $3 a month.
    Ms. Velazquez. Thank you.
    Ms. Del Rio, it's great to see you.
    New York City's municipal ID card, IDNYC, was one of the 
first municipal ID cards that could be utilized to open a bank 
account or access traditional financial services.
    Can you speak to the important role municipal ID cards are 
playing in helping underserved communities gain access to bank 
accounts and other mainstream financial services?
    Ms. Del Rio. Yes. Thank you so much for that question.
    Our organization was one of many that led the campaign that 
resulted in the creation of IDNYC, a municipal ID card that is 
available to all New Yorkers regardless of immigration status, 
homelessness, and other factors. More than 1.4 million New 
Yorkers have the ID, which was designed in close consultation 
with local credit unions and banks, as well as regulators.
    And one of the benefits of the ID was that it was designed 
to meet the Federal Know Your Customer (KYC) requirement so 
that banks could accept that as the primary and sufficient ID 
to open accounts and extend other services.
    Despite all of that groundwork, none of the big banks have 
accepted IDNYC as the primary ID to open accounts, despite 
regulators issuing opinion letters and other guidance.
    That said, there is a strong network of community-based 
credit unions and smaller banks that have accepted and opened 
thousands upon thousands of accounts for New Yorkers who were 
previously excluded. So the fact that banks continue to reject 
that ID and discriminate against massive swaths of--
    Ms. Velazquez. Ms. Del Rio, I have other questions.
    Ms. Del Rio. Okay.
    Ms. Velazquez. I just would like to ask a follow-up to 
that. Why do you think more banks haven't been willing to 
accept municipal ID cards as a primary form of ID? And what can 
Congress do to help further their utilization by banks? What do 
you suggest?
    Ms. Del Rio. The banks have said that they needed guidance 
from the regulators, that guidance was secure, and the policies 
did not change.
    We have bank compliance officers who tell us they believe 
that this population is more prone to fraud and exposes the 
banks to greater risk. We would argue that, if the banks 
perceived these populations who rely on municipal ID cards to 
be more profitable, they would change their policies pretty 
quickly.
    We know that there are Federal proposals now to secure more 
clear guidance from the banking regulators about municipal IDs. 
We think that examiners should actually look at banks' account-
opening policies, including their identification requirements, 
and identify potential discrimination against protected 
classes, including immigrants, and take strong action to change 
that.
    Ms. Velazquez. Thank you.
    Mr. Chairman, I guess I have to yield back.
    Chairman Perlmutter. The gentlelady yields back.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Mr. Chairman.
    A recent FDIC study illustrates that rural customers are 
more likely than their urban or suburban counterparts to do 
their banking in person at a branch. Unfortunately, the trend 
in bank consolidation and branch closures because of increased 
regulation in a post-Dodd-Frank world has disproportionately 
impacted rural areas.
    My bill, the Promoting Access to Capital in Underbanked 
Communities Act, is relatively straightforward, allowing for a 
phase-in of capital requirements for de novo institutions, 
including some provisions targeted toward underserved rural 
areas and several other common-sense provisions to promote bank 
access in unbanked communities.
    My bill is supported by the Independent Community Bankers 
of America (ICBA) and the American Bankers Association (ABA), 
and, Mr. Chairman, I hope the Majority will agree to consider 
my bill in an upcoming markup. I have had good conversations 
with Mr. Lawson and Mr. Meeks about this legislation that would 
help new bank formation in rural and underserved areas, and I 
would urge Chairman Perlmutter to take a look at it.
    Chairman Perlmutter. Mr. Barr, we will take it under 
advisement.
    Mr. Barr. Thank you very much.
    Mr. Berlau, how might my legislation, which would spark new 
bank formation, aid underserved communities, including unbanked 
citizens in rural areas?
    Mr. Berlau. It sounds like very good legislation.
    There was a real problem, not just with Dodd-Frank, 
although that was problem enough for smaller banks, but just 
about the new requirements, particularly the FDIC, about having 
to have so much capital, sometimes, like, 10 years' worth of 
capital, to form a new bank, that just discouraged some of the 
de novo applications there.
    But, luckily, FDIC Chair McWilliams has been making de novo 
approvals a priority, as well as the bipartisan leadership at 
the National Credit Union Administration for de novo credit 
unions.
    But, certainly--and I have been saying that if you have 
legislation to give the regulators incentive or to make it--to 
have certain reviews where they would require it or streamline 
the process for de novo banks, that would be very important and 
very important for--
    Mr. Barr. And, if I could reclaim my time, it is not just 
about bank consolidation; it is the dearth of new bank 
formation, the dearth of new charters. And that is really 
hurting underserved communities.
    If we really care about helping the unbanked, it would be 
to provide them with greater diversity in the financial 
services ecosystem, and that would be to encourage new bank 
formation.
    It is shocking to me how the Majority's witnesses have 
identified that the solution to the problem of unbanked people 
in America is to destroy banks. That is what we are hearing 
today from the Majority's witnesses.
    Think about this. If you put the Post Office in charge of 
banking America, consider the finances of the Post Office 
itself. The unfunded liabilities and the debt of the Post 
Office at the end of 2020 was $188 billion, more than 250 
percent of its annual revenue. This is like asking the 
arsonists to put out the fire. It really is. It is absolutely 
crazy.
    And using the power of the government to crowd out the 
public sector, to politicize banking, will make it harder--
harder--not easier, for Americans to access financial services.
    The Paycheck Protection Program is an illustrative case 
study in the comparative efficiency and effectiveness of the 
private sector versus the government. Congress deputized 
private banks to deploy aid to small businesses and was 
incredibly successful.
    Meanwhile, other assistance programs administered by the 
government and government agencies have languished in 
bureaucracy. Yesterday, the HUD Secretary was here, and we saw 
it firsthand. Congress appropriated $45 billion for emergency 
rental assistance, and less than 4 percent of it has actually 
reached renters.
    And we want to put the public sector in charge of banks? 
Really? Politicizing banking is not a good idea.
    Mr. Pawar, you said when a bank chooses whom to lend to and 
whom not to lend to, it is making policy. Does that mean you 
oppose banks categorically excluding providing financial 
services to, say, the fossil energy sector?
    Mr. Pawar. I didn't say that. What I did say was that 
public banking, FedAccounts, are simply gap-fillers. A healthy 
market does not leave this many people behind.
    Mr. Barr. Let's not replace the private banking system with 
government-run banks.
    Mr. Berlau, how would that impact low- and moderate-income 
individuals, if the public sector was in charge of banking?
    Mr. Berlau. I think at the end, it was a preservation 
measure that [inaudible] Danger that the public banking bill we 
are discussing [inaudible] Fossil fuels, and you would 
[inaudible].
    Mr. Barr. You talk about redlining. If you put politicians 
in charge of allocating credit, if you put bureaucrats in 
charge of allocating credit, you are going to get redlining 
everywhere.
    I yield back.
    Chairman Perlmutter. The gentleman yields back.
    Mr. Foster from Illinois is recognized for 5 minutes.
    Mr. Foster. Thank you, Mr. Chairman.
    No matter how one prefers to expand access to banking, 
establishing a secure and legally traceable identity remains 
one of the biggest barriers to entry. Opening a bank account 
requires a documented, verifiable identity. Know Your Customer 
requirements mandate that banks must know with a high degree of 
certainty whom their patrons are. The same applies to obtaining 
Federal benefits without friction and fears of fraud.
    This makes things challenging for consumers who don't carry 
with them the specific legacy documents normally used to prove 
your identity. A recent report from six banking trade groups 
outlines verifiable identity as one of the chief reasons for 
individuals being unbanked or underbanked in America.
    A secure digital identity framework solves this problem. A 
properly designed digital identity is a more secure and more 
privacy-preserving form of identity that provides consumers 
with a way to authenticate and verify who they are without 
having to rely on your Social Security card or birth 
certificate.
    A digital ID would effectively eliminate most classes of 
consumer identity fraud as well. Unlike legacy identity 
methods, a digital ID is almost impossible to counterfeit. A 
government-provided digital identity would alleviate the 
challenges in obtaining ID and would pave the way for millions 
of Americans to be able to verify their identity and to 
participate in our increasingly-online financial system.
    Many States, including, interestingly, many red States, are 
already moving rapidly on this by provisioning digital driver's 
licenses or mobile IDs to citizens who want them.
    There are two significant steps that Congress can make to 
encourage progress here.
    First, there is now real bipartisan agreement for providing 
universal access to affordable broadband for all Americans, 
with significant funding provided in the pending infrastructure 
proposals. Most of these proposals include some form of 
payments to States for assisting new broadband customers. So, 
if these broadband connections are bundled with a State-issued 
secure digital ID, this would be transformative to access to 
banking. It would also pay for itself in fraud-prevention costs 
alone.
    Second, the government has to get its act together in using 
modern identity systems and stop using things like Social 
Security numbers, birth dates, mother's maiden names, or 
easily-hacked passwords as some sort of shared secret for 
authentication.
    Although it is not being noticed at this hearing, the 
recently-introduced bipartisan Improving Digital Identity Act 
of 2021 provides a roadmap for an all-of-government approach to 
improving our digital identity ecosystem. I urge my colleagues 
to have a look at this and to support this legislation.
    So my questions, I guess, to Ms. Del Rio and to the whole 
panel: Can you delineate some of the struggles that low-income 
individuals may have in obtaining a bank account, particularly 
as it pertains to proving their identity?
    And how would an improved government-provided digital ID 
framework help include more Americans in our financial system? 
And, specifically, could you speak to how a government-provided 
digital ID would disproportionately benefit lower-income, 
rural, and minority consumers?
    I will start with Ms. Del Rio.
    Ms. Del Rio. Yes. Thanks for the question.
    As you noted, the digital ID proposal is not part of the 
hearing, so we would need to study that more closely. I do 
think that there are big questions around data collection, 
privacy, and other concerns that would need to be really 
carefully looked at.
    I also would say that the current Know Your Customer 
requirements that you cite are actually quite flexible, and 
they have been since the provisions were put into place many 
years ago. And they actually allow for great flexibility with 
financial institutions to accept a wide range of U.S.-issued 
and foreign-government-issued IDs, consular-issued IDs, 
municipal IDs, and so on. People without Social Security 
numbers can provide the identification number from these other 
ID cards.
    Despite this flexibility that the regulators have 
consistently provided, the banks too often go far beyond that, 
and they create impediments that effectively block hundreds of 
thousands of Americans from the banking system.
    Other challenges that we have seen, other barriers include, 
again, these overdraft fees that many of us have spoken about. 
I just want to underscore that there is research by the Center 
for Responsible Lending that shows it is a very small 
percentage, 9 percent of account holders who pay more than 80 
percent of these billions of dollars in overdraft fees, hidden 
fees--
    Mr. Foster. Yes, I was referring specifically just to the 
digital ID aspects.
    Do any other members of the panel have comments on this and 
the benefits, and how this is affecting access to banking?
    And I guess my time is about to run out. But if you have 
any comments, specifically on the other legislation that I 
mentioned, I would be interested in your response for the 
record.
    Thank you. I yield back.
    Chairman Perlmutter. Dr. Foster yields back.
    The gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams of Texas. Thank you, Mr. Chairman.
    In full disclosure to our witnesses, I am just a small-
business owner from rural Texas. I have been there for 51 
years. And I have heard here today that the Post Office today 
is the most-trusted brand name in America. Well, it is not in 
my district. And I would hate to think that the Post Office is 
going to be an example for all of us to follow in the banking 
system. Or maybe, I have a better idea, how about Amtrak 
running the banking system?
    So, if you want to increase financial inclusion, we are 
going to need to empower the private sector to develop 
innovative new solutions to bring people into the banking 
system. In order to accomplish this goal, the government, of 
course, needs tax policies that will incentivize our country's 
entrepreneurs to take risk and deploy their own capital to 
solve these problems.
    And I would say simply, I can fix it. Let's just cut taxes 
for everybody so people have more money in their pocket. Then, 
they have a bigger check to take to the bank and create an 
account. That is what it is all about.
    Unfortunately, we have seen some tax proposals coming from 
the Biden Administration that will make these types of 
investments and a bigger check less attractive by significantly 
increasing the carried interest in capital gains taxes. Well, 
this is stupid. Without proper profit incentives, we are going 
to have a hard time convincing investors, like all of you, to 
go the extra mile to connect people who are unbanked.
    So, Mr. Berlau, can you talk about how the Biden 
Administration's proposed carried interest tax provision would 
hurt venture capital firms and other angel investors who are 
taking the financial risk to bring new financial products to 
the market and hurt the small investor?
    Mr. Berlau. Yes. Thank you.
    I have written that it would. All partnerships are sort of 
based on carried interest, although it is being sold as private 
equity and hedge fund--I mean, real estate partnerships, angel 
investors, just some basic small-business partnerships. And not 
even just the rate, but going back 30 years, as far as saying 
who contributed this capital to the firm, it would actually 
hurt small-business partnerships and tilt things through to 
corporations. So, I think it would be destructive more than 
some people are anticipating.
    Mr. Williams of Texas. Yes. It is double taxation, and you 
would have fewer investors.
    Second, in speaking with businesses during the Trump 
Administration, many of them felt confidence in their 
operations because there was certainty around the regulatory 
environment. They were not afraid that there would suddenly be 
a costly new regulation coming out of Washington, D.C., that 
would force them to hire more compliance officers--and, say, in 
a bank, more compliance officers and loan officers who don't 
provide any additional value for their company or shareholders. 
So, now that there is a new Administration in town, as they 
say, and a new sheriff in town, this sentiment has changed to 
uncertainty again and fear among business owners.
    Mr. Berlau, can you discuss how this regulatory uncertainty 
coming out of the Biden Administration can truly affect small 
businesses, big businesses, and business investment?
    Mr. Berlau. Yes, regulatory uncertainty can certainly 
affect investors in small businesses.
    However, I am an eternal optimist, and CEI is a nonpartisan 
organization, and we have worked on things like, as I 
mentioned, the SAFE Banking Act, which would provide clarity 
for a lot of banks in States where marijuana is now legal, as 
well as in the Obama Administration, the Jumpstart Our Business 
Startups Act that made it easier to do equity crowdfunding 
without having to show that you were a Fortune 500 company.
    So I am hopeful, but, yes, always, the threat of new heavy-
handed regulation is threatening and hurts the economy.
    Mr. Williams of Texas. No question about it.
    We have heard some discussions about the Federal Reserve 
offering bank accounts as a way to get more people included in 
the financial system. And considering we have so many banks, 
credit unions, and Fintech companies already offering this 
service, I don't really understand how a public option would 
solve this problem, because we know that when government gets 
involved in something, it just creates another problem.
    So another question to you, Mr. Berlau, can you talk 
quickly about some of the negative side effects of creating a 
Fed Account system?
    Mr. Berlau. Yes, there are some negative effects. I think 
for privacy, as far as this is the Fed directly having that 
data of customers, and the data security issues of having 
basically--the government can throw, like, a blockchain or a 
ledger of all the data there.
    Mr. Williams of Texas. Okay. Thank you.
    And I yield back, Mr. Chairman.
    Chairman Perlmutter. The gentleman yields back.
    The gentlewoman from Massachusetts, Ms. Pressley, who is 
also the Vice Chair of this subcommittee, is now recognized for 
5 minutes.
    Ms. Pressley. Thank you, Mr. Chairman.
    In full disclosure, I am a Black woman, growing up in 
America, who was raised in a redlined neighborhood and who, 
once I was working as a full-time, unpaid congressional intern 
and working three part-time jobs, piecing together various 
money orders to pay rent, to pay utilities, I cashed my check 
at a check-cashing facility, and I did that because that is 
what I grew up in proximity to.
    Neighborhoods like Boston and Worcester and Roxbury in East 
Boston, which I represent in the Massachusetts Seventh 
Congressional District, predominantly Black, Hispanic, and 
Latinx, have 57 percent of the city's check-cashing locations, 
yet only 12 percent of the city's commercial bank branches.
    So, for my constituents and the estimated one in five 
people across America who are unbanked or underbanked, lack of 
access and fractured trust with financial institutions is 
incredibly expensive. The cost of cashing checks alone can cost 
up to $2,400 for households with an annual income of $32,000--
just cashing checks.
    That doesn't even include the costs and penalties of payday 
loans and the costs of not having credit. Being credit 
invisible can make it virtually impossible to finance a car, an 
education, a home, and even a cell phone plan.
    Banking institutions understand the power of their 
products. It is not an accident that communities of color have 
less access to the wealth-building resources and services that 
banks offer but are instead surrounded by high-cost, exploitive 
options like payday lenders and pawnshops.
    Banking deserts and the implicit and explicit exclusionary 
practices of financial institutions are widening the racial 
wealth gap. And we need bold legislative action to build an 
inclusive, equitable economy.
    Ms. Baradaran, I briefly described how few commercial bank 
branches exist in the communities of color in my district and 
throughout the country. However, these communities do have Post 
Offices. Can you describe how an expansion of USPS services to 
include banking would remove structural barriers for people who 
are unbanked?
    Ms. Baradaran. Thank you so much for the question, and for 
drawing attention to the structural inequalities here. The 
reason why those neighborhoods do not have banks was very much 
a policy decision.
    And, as Mr. Pawar said earlier, that is why credit is 
public policy, because the majority of credit products that 
have historically built the middle class were underwritten, 
guaranteed by the Federal Government, and those communities 
that were redlined just specifically because they were Black or 
Brown did not get those loans. So that is what we mean by, 
``credit is a public policy issue.''
    And the same with the payment system. The Federal Reserve 
controls the payments. We have ID requirements because Congress 
has decided, I think rightfully, that we want to make sure 
people aren't sending money for illegal things through the 
banking system. This is how the public structure of the banking 
system works, and certain communities have been left out of 
that historically.
    And those communities not only didn't get the credits to 
build wealth and didn't get to--that is why we have the racial 
wealth gap--but, also, the salt on the wound is exactly as you 
said, the check-cashing fees, the overdraft fees, the payday 
lending fees. And we are talking about even people who are 
banked who have to go get a payday loan because of these 
structural inequalities, and they are paying way more than 
others. So, that is just salt on the wound. That is not even 
getting to the structural roots of these issues.
    And the postal bank exactly is just one solution of many 
that we need to really tackle this massive problem. And that is 
just because it is already there; those neighborhoods trust it. 
We are not talking about the bells and whistles, but--
    Ms. Pressley. Thank you.
    Ms. Baradaran. --those can come later once people get that 
account.
    Thanks.
    Ms. Pressley. Thank you so much.
    And, Mr. Pawar, how would some of the greatest challenges 
of being unbanked be solved by a national Baby Bonds program?
    Senator Booker and I have introduced the American 
Opportunity Accounts Act, which would ensure that every child 
at birth not only has a basic savings account but also has that 
account seeded with funds to be used for wealth-building 
activities, like starting a business or buying a home.
    Could you offer your opinion on the benefits of Baby Bonds?
    Mr. Pawar. Yes. Thank you for that question.
    One of the things that we have learned over the last 18 
months that preexisted before the pandemic is that we lack the 
financial infrastructure to deliver cash to people quickly.
    And so, when we think about Baby Bonds or we think about 
FedAccounts, what we need to do is have a base level of 
infrastructure so that everyone can access benefits that they 
are entitled to, they can receive money, they can pay bills, et 
cetera, et cetera.
    So it would simply function as a conduit to be able to have 
that money parked somewhere safely, without subject to 
extraction, and in a way that is accessible universally to 
everybody.
    Ms. Pressley. Thank you.
    Chairman Perlmutter. Thank you.
    The gentlelady's time has expired.
    We now turn to Mr. Loudermilk of Georgia for his 5 minutes.
    Mr. Loudermilk. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here, and I am so glad you needed me to be 
here. That is encouraging.
    President James Garfield, said, ``If Congress is reckless 
and ignorant and corrupt, it is because the people accept 
recklessness, ignorance, and corruption.'' That is what the 
American people think about this institution. And just because 
they think that we are reckless, ignorant, and corrupt doesn't 
mean that we have to meet their expectations.
    Just in the short time I have been here, I have seen some 
really bad ideas proposed, and this one has to be near the top. 
I can already see numerous problems with expanding the 
government bureaucracy to be involved in helping people with 
their bank accounts.
    Think of this: Only 25 percent of Americans trust that the 
Federal Government works in their interest--25 percent. Simple 
math--I am not a banker either, but simple math is that 75 
percent of Americans don't trust the Federal Government. But we 
think that they are going to trust us with their bank accounts.
    Look, let's talk about customer service. Customer service 
is at an all-time low in the Federal Government. We don't even 
have to bring up efficiency. Look at how much money our 
government spends and how inefficient it is. If my colleagues 
don't believe this, how about making a call to your constituent 
services operation and ask them if the government is efficient, 
if it is responsive, and if it provides any customer service.
    So what I am wondering is, if this were to be enacted, are 
our customer services representatives now going to be handling 
people's deposits and withdrawals and dealing with government 
agencies that are nonresponsive already?
    I think this whole proposal is doomed to fail, not to the 
American taxpayers, which it would be, but to the very people 
that it supposedly is trying to help.
    Now, think about who the base would be. According to FDIC 
data, 95 percent of American households are banked. That means 
5 percent are unbanked. Of that 5 percent, the majority of them 
are unbanked because they don't want a checking account. But, 
all of a sudden, we are going to let the Post Office handle it. 
Oh, now everybody is going to want a checking account. I don't 
think so. So, that means less than 2.5 percent of the people 
would actually be interested in this type of service.
    I would think that improving some of our existing system, 
instead of overhauling it and creating a new bureaucracy, would 
be the answer, and especially when you look at these agencies 
and bureaucracies that can't even balance their own checkbooks. 
But we are going to trust them to help us balance ours? I think 
this is doomed to fail.
    Fortunately, the growth of online banking has made it 
easier to open checking accounts. The FDIC Chief Innovation 
Officer said that the best way of banking the underbanked is 
through technology. I think that is where the answer is, not 
growing bureaucracies and giving the government more control 
over the American people.
    So, Mr. Berlau, is there any evidence that the banking 
system is failing to adequately meet customers' needs?
    Mr. Berlau. I think you are seeing Fintech and community 
banks and credit unions rise to the occasion. And I think you 
would see them even doing more so if you would streamline some 
regulations, clarify who the true lender is in bank-Fintech 
partnerships. And you would see even more if some of the red 
tape were lifted.
    Mr. Loudermilk. So, how has Fintech actually made it easier 
to open a checking account?
    Mr. Berlau. Apps like Dave, and Earnin, being able to just 
put that on your phone; having sometimes low-cost advances to 
cover what would be an overdraft, or to get what you have 
earned before your paycheck comes. That is all--and they 
partner with banks, sometimes the smaller banks. So, that has 
made it easier for a lot of Americans.
    Mr. Loudermilk. I am quickly running out of time, but what 
improvements can we make to the existing system to help this 
less than 2.5 percent who would actually want a bank account 
but don't have one?
    Mr. Berlau. I think both things like Congressman Barr's 
bill with encouraging de novo banks, new banks being formed, 
and also just clarifying who is a true lender, clarifying 
valid-when-made, that banks know, if they have liquidity behind 
these loans, they would certainly make more of them.
    Mr. Loudermilk. Okay. Thank you for that. I appreciate 
that. And Mr. Barr's bill is a good idea.
    Thank you, Mr. Chairman, and I yield back.
    Chairman Perlmutter. The gentleman yields back.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is now 
recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Chairman, I happen to think that Ms. Ocasio-Cortez and 
Ms. Tlaib have good ideas. I happen to think that the Public 
Banking Act of 2021 is worthy of consideration.
    And I happen to believe that you don't have to be a banker 
to serve on the Financial Services Committee. In fact, most of 
us aren't; very few of us are bankers. Very few of us have any 
banking experience at all, yet we serve on the committee that 
regulates not only banking but also other financial 
institutions.
    So, Mr. Pawar, I want you to know that I appreciate your 
testimony today. I think you have been an outstanding witness. 
And I don't know that you have to have lived something to 
appreciate it and understand it.
    With reference to banking, poor people, regardless of 
color, regardless of hue, have great difficulty when it comes 
to paying their bills. You heard Ms. Pressley. It touched my 
heart to hear her talk about her circumstance. But they have 
great difficulty.
    Like Ms. Pressley, I grew up in poverty. There were very 
few banks, if any at all, that I actually went into as a child 
in my neighborhood.
    Why wouldn't we want to help people who have to go to the 
check-cashers, to these places where they are paying unusually 
high fees to get what we get at no cost? Most members of this 
committee have no-fee checking; I would bet my life on it.
    We seem to think that the rest of the world exists in the 
bubble that we live in. We are blessed. Unfortunately, we don't 
understand the basic premise for being blessed, which is that 
you should be a blessing to others who need help.
    They don't live in the suites of life, the C-suites. Many 
of them live in the streets of life. Some of them live under 
bridges. They live in lean-tos and tents.
    There seems to be a basic belief among some that the rich 
need more to do more and the poor can do more with less. At 
some point, we have to concern ourselves with those who are not 
as fortunate as we are. And we who sit in these seats are some 
very fortunate people.
    So, yes, I support the notion that we should promote the 
formation of public banks operated by local or State 
Governments through the creation of a public banking incubator 
program that provides grants and technical assistance to new 
public banks.
    Ms. Ocasio-Cortez, Ms. Tlaib, I think very highly of what 
you are attempting to do.
    By the way, I have never had a conversation with them about 
this, but they are very intelligent people. They don't have 
crazy ideas simply because they are different, simply because 
they are innovators, simply because they understand another 
side of life. I think this would help many of my constituents, 
who are not as fortunate as most of the people who serve on 
this committee.
    And I yield back my 30 seconds. Thank you, Mr. Chairman.
    Chairman Perlmutter. Thank you, Mr. Green.
    Mr. Budd from North Carolina is now recognized for 5 
minutes.
    Mr. Budd. I thank the Chair.
    Mr. Berlau, we need to be doing more as a society to give 
Americans the tools that they need to be plugged into the 
financial system. So it is very concerning to me that a 
majority of students graduate from high school, some of them 
even graduate from college, and they don't know how to balance 
a checkbook or open a checking account, manage interest, or 
procure a mortgage.
    Without this basic knowledge, it is difficult for a lot of 
folks to deal with complex financial situations that come up 
later in life or even at that point in life. That is why I have 
worked on financial education and financial literacy 
legislation like the Financial Literacy Improvement for 
Professionals (FLIP) Act, which helps build that foundation for 
young Americans.
    So, Mr. Berlau, what are additional ways we can educate 
Americans about the resources that are available to them and 
get them participating in the financial system earlier, rather 
than feeling like a victim or that it is impossible? How can we 
get them involved?
    Mr. Berlau. Your legislation is a good idea. Also, the 
Fintech apps showing just what you do with a small amount of 
money, either saving or investing that, is a way to go where 
the young people are, as far as online or on the apps.
    It is also something that parents and teachers should not 
be afraid to talk about, to talk about money, and at an early 
age, to develop saving and investing and shopping for bargains, 
those habits, as well as churches and synagogues and places of 
faith.
    Mr. Budd. Thank you.
    A slightly different topic, Mr. Berlau, but quickly, if you 
could answer: Do we really want the Federal Government 
overseeing our financial transactions history?
    Mr. Berlau. I don't think we do. I don't think it has a 
good record as far as respecting privacy or data security or 
other things.
    And I appreciate Professor Baradaran having written a book 
about George Washington, invoking him as far as the Post 
Office, but I have also written that as a private citizen he 
helped found the Bank of Alexandria. So, I think he could see 
that banks and Post Offices serve different functions and 
probably shouldn't be mixed.
    Mr. Budd. Thank you.
    Many of the so-called solutions that I hear about seem to 
have a really counterproductive effect. Like a lot of the 
solutions that come from the left, they sound sweet, 
compassionate, sometimes they are even hypnotic or sermon-like, 
but they really always have a counterproductive effect. They 
hurt the unbanked and the underbanked consumers even further. 
Bad policies like imposing a 36-percent nationwide APR, 
thinning their credit files, postal banking, repealing the True 
Lender law, that just makes the problems worse.
    So, are there regulatory hurdles we can reduce that would 
expand access to banking for the unbanked?
    Mr. Berlau. As I said, before we had the Durbin amendment, 
before debit card fees were tapped in Dodd-Frank for retailers 
and retailers had to pay the costs of cybersecurity and 
everything, banks were able to give more free checking 
accounts, 76 percent in 2009. So, we could repeal that.
    As well as, I think, just encouraging more bank-Fintech 
partnership by setting standards for who is a true lender and 
valid-when-made as far as being able to have a liquid secondary 
market for these types of loans just as--
    Mr. Budd. Mr. Berlau, let me just summarize quickly. So, 
you are saying the Durbin amendment actually hurt the 
underbanked?
    Mr. Berlau. Very much so.
    Mr. Budd. Thank you.
    Mr. Berlau. By 1 million--
    Mr. Budd. Thank you.
    We have talked a lot about the important role that the 
private sector plays in expanding access to banking with 
innovation. One area is decentralized finance, which removes 
financial intermediaries and puts consumers in control of their 
finances with products like peer-to-peer lending.
    What is an example or what are some thoughts on the promise 
of new tools like this to help the underbanked and unbanked?
    Mr. Berlau. I think cryptocurrency, decentralized finance, 
blockchain, even blockchain with things like Congresswoman 
Velazquez was mentioning with IDs, can provide a lot of new 
tools, just as they are in some Third World countries and 
things like that, for the poor and the middle-class.
    Mr. Budd. Very good.
    I will yield back my remaining time.
    Thanks for being here.
    Mr. Berlau. Thank you.
    Chairman Perlmutter. Thank you, Mr. Budd.
    Mr. Torres, the gentleman from New York, is now recognized 
for 5 minutes.
    Mr. Torres. Thank you, Mr. Chairman.
    I just want to--someone brought up Fintech as a possible 
solution to the crisis of the unbanked. It is worth noting that 
50 percent, or nearly 50 percent of households living in 
poverty in New York City have no access to the internet. So, if 
you are at the wrong end of the digital divide, Fintech is of 
no value to you, and brings you no closer into the mainstream 
of the financial system.
    I represent one of the most unbanked congressional 
districts in the country. According to the FDIC, in the United 
States, 5.4 percent of Americans are unbanked. In New York 
City, the rate is 9.4 percent. In the Bronx, it is 17.7 
percent. So, in the Bronx, the number of unbanked people is 
nearly triple the national average.
    And the lack of banking access leaves communities like mine 
wide open to exploitation by predatory finance, particularly 
check-cashing. According to the Department of Consumer Affairs, 
New Yorkers, on average, spend more than $200 million a year on 
check-cashing fees. And, in two neighborhoods in particular, in 
the South Bronx, which is primarily Latino, and in Southeast 
Queens, which is primarily African American, low-income New 
Yorkers in those two neighborhoods spend more than $17 million 
a year on check-cashing fees.
    Is it fair to say that we have a financial system that robs 
poor people of their fixed income, that essentially siphons the 
most from those who have the least?
    Professor, I don't know if you want to respond to that?
    Ms. Baradaran. I think that would be a safe statement, yes.
    Mr. Torres. And I am no--
    Ms. Baradaran. I can elaborate, if you would like.
    Mr. Torres. No, I can go on. I am no expert in banking, but 
it seems to me the business model is straightforward: Banks 
collect deposits, and then lend out those deposits. And banks 
have an incentive to collect larger deposits in order to make 
larger loans in order to earn larger profits.
    And so, given those incentives, the market often fails to 
serve the lowest-income Americans, who cannot afford minimum-
balance requirements and overdraft fees. And whenever there is 
a market failure, it is not unusual for the government to 
intervene with a public option, right? There are public 
providers of healthcare. There are public providers of housing. 
There are public providers of higher education. There is ample 
precedent for the government intervening with a public option 
in the midst of a market failure.
    I don't know if you want to comment on that?
    Ms. Baradaran. Yes. That is exactly right. It costs the 
same amount of overhead to take a $500,000 deposit from a 
corporate client as a $100 deposit from a person. And so, the 
cost-benefit, the economics of banking doesn't support those 
kind of small accounts.
    And the reason we had a robust community banking sector 
back--it wasn't Dodd-Frank that killed it; it was way before 
that--was that we purposely regulated banks such that they 
couldn't branch, they couldn't get larger. Every community had 
to have a bank branch, and that was how banks could afford to 
take these smaller deposits, because they didn't have that 
heightened competition that we see now.
    In today's market, it is really difficult for small banks 
to lend, or to give deposit accounts to low-income people, 
especially in LMI communities, where there aren't the profits.
    So, it is not that the banks are greedy or bad or 
especially, sort of gaming the system. It is just that the 
system doesn't make it such that they can lend and give 
deposits to low-income people.
    Mr. Torres. Mr. Rothstein, I have a question about Bank On 
accounts. Are Bank On accounts, no-overdraft accounts?
    Mr. Rothstein. Thank you for the question, Representative. 
Yes, all Bank On accounts have no overdraft fees and no 
insufficient-fund charges on them.
    Mr. Torres. There are about 10,000 banks and credit unions 
in the United States. How many of them offer Bank On accounts?
    Mr. Rothstein. To date, I think we are at 108, including 
credit unions.
    Mr. Torres. And of the 108, how many are banks?
    Mr. Rothstein. I believe--I will get you a list after the 
hearing, but I--
    Mr. Torres. Are they majority banks or credit unions?
    Mr. Rothstein. Majority banks.
    Mr. Torres. Okay. Why is the participation so negligible?
    Mr. Rothstein. I think, one, it is a newer program.
    Mr. Torres. How long has it been around?
    Mr. Rothstein. We have been certifying financial 
institutions for 6 years now.
    The big piece, I would say, though, again, is if you look 
at the market share and the number of branches covered, it is 
very large. About 40 percent of all the branches of banks in 
the country offer at least one Bank On-certified account. And I 
would say, probably--my hope is, by September, we are going to 
be around 45 percent.
    Mr. Torres. Should it be mandatory rather than voluntary? I 
would say yes, but I am curious to know your answer.
    Mr. Rothstein. That would either be tremendous job security 
for me, or I would have to find a new thing to do.
    No. I have mixed feelings. I really do. I think part of the 
reason that Bank On works so well is that the banks and credit 
unions themselves brand these accounts and fit them into their 
suite of accounts. And so, if we take too much of a cookie-
cutter approach in mandating the accounts and we take away the 
creativity and we take away the ability for them to position 
the accounts in their community, then we are not doing--
    Mr. Torres. I am in the red, so my time has expired.
    Mr. Rothstein. I'm sorry.
    Chairman Perlmutter. The gentleman's time has expired. I'm 
sorry to cut you off again, Mr. Rothstein.
    Mr. Rothstein. That is fine.
    Chairman Perlmutter. I now recognize the gentleman from 
Tennessee, Mr. Kustoff, for 5 minutes.
    Mr. Kustoff. Thank you, Mr. Chairman.
    And thank you to the witnesses for appearing today.
    Mr. Berlau, can you talk about--I know we are all concerned 
about the loss of bank branches over the last 10 to 12 years. 
Can you talk about the effect Dodd-Frank had on the 
exacerbation, if you will, of bank branch losses or decreases 
over the past 10 to 12 years?
    Mr. Berlau. Yes. There was a loss of community banks even 
before Dodd-Frank, part of market consolidation. But Harvard's 
Kennedy School did a study, which I would be happy to share 
with you or others who are interested, which found it rapidly 
accelerated after Dodd-Frank.
    Not only like the State National Bank of Big Spring, Texas, 
it didn't close, but it was saying it would just--because of 
some of the regulations, it was just not offering mortgages 
because it was too expensive to comply with the qualified 
mortgage--and it had very few, if any, defaults--I think it may 
have had no defaults--for a period of 20 years.
    So, it just accelerated trends and made it costly for both 
banks and credit unions to operate, and some had to close or 
merge with others.
    Mr. Kustoff. So, Dodd-Frank is a clear factor in the 
decreasing number of bank branches over the last 10 to 12 
years?
    Mr. Berlau. Yes. There was a Harvard Kennedy School study 
that showed that, as well as others, as well as if you talk to 
the Independent Community Bankers of America, the Credit Union 
National Association, other groups representing community banks 
and credit unions, they will talk about how the debt has 
certainly been a significant, substantial factor.
    Mr. Kustoff. Thank you, Mr. Berlau.
    Could you talk about the True Lender rule? And was the 
rule, in your opinion, necessary to create any certainty within 
the industry?
    Mr. Berlau. It certainly would have helped, because, 
basically, it would have brought the certainty that, say, the 
larger banks have when they are issuing credit cards and they 
follow national rather than State rules, say, on interest 
rates. Large banks already have that for credit cards, but 
smaller banks, which don't have the infrastructure for 
underwriting that some Fintech firms have, it would have 
brought certainty to them that they would have been able to do 
this under the same privileges of the law as the larger banks. 
Plus, the loans also certainly would still be subject to the 
bank rules, like Federal rules, like fair lending and ability 
to repay.
    Mr. Kustoff. So, it's a true statement that the rule does 
have an impact on financial inclusion?
    Mr. Berlau. Yes, it would have, were it not repealed by 
Congress. So, yes, it very much would have helped financial 
inclusion. And I hope Congress can do a bipartisan solution, of 
a similar rule.
    Mr. Kustoff. Thank you, Mr. Berlau.
    If I could, I don't think you have the benefit of this 
letter. The chairman and the ranking member were sent a letter 
yesterday from the Consumer Bankers Association about some of 
the proposed legislation. In the letter I think the committee 
members got, or at least I got, they addressed the Public 
Banking Act of 2021.
    I want to read a statement to you from the letter and ask 
you whether you agree with it. This is about the Public Banking 
Act of 2021: ``The entrance of another government-subsidized 
entity into the consumer financial market would not only affect 
the competitiveness of the nation's thousands of financial 
institutions currently serving consumers and small businesses, 
it would also expose American taxpayers to an increased 
financial risk.''
    Would you agree with that statement or disagree with it?
    Mr. Berlau. I certainly would agree. That is in my 
testimony.
    Mr. Kustoff. Let me read another statement from the letter: 
``The creation of a government-sponsored public bank option 
with endless resources will likely leave many private 
institutions with a distinct competitive disadvantage within 
the financial services marketplace.''
    Would you agree or disagree with that statement?
    Mr. Berlau. I certainly would agree. And then, with the 
government institution, it would also give the government more 
discretion as far as if they wanted to cut off everything from 
fossil fuel or, say, if one government didn't like marijuana, 
they could cut that off and people would have less choices.
    Mr. Kustoff. Thank you, Mr. Berlau.
    My time is expiring. I yield back my 4 seconds.
    Chairman Perlmutter. The gentleman yields back his 4 
seconds.
    The gentleman from California, Mr. Vargas, is recognized 
for 5 minutes.
    Mr. Vargas. Thank you very much, Mr. Chairman. And thank 
you for this hearing. I appreciate it very much. I apologize 
that I missed part of it. I had another hearing at exactly the 
same time.
    I did come in, in time, however, to hear one of my 
colleagues say that the public doesn't trust us. Well, of 
course, they don't trust us when you can't hear us speak with 
one voice that we should be vaccinated. It is important to get 
vaccinated. When we clearly don't say that, yes, President 
Trump lost the last election and when we don't say clearly 
that, yes, there was an insurrection here and, in fact, yes, 
the Capitol was attacked; it wasn't just tourists walking 
around.
    But the part that I found kind of interesting, really, 
apart from all that silliness, was the part about how you can't 
trust the Federal Government, so you can't trust a public bank. 
Because I would ask, well, are you part of the Federal 
Employees Retirement System (FERS)? And they would probably 
say, okay, well, that is the Federal Government. That is the 
same people. Okay. Now, are you part of TSP? Yes. Well, that is 
the Thrift Savings Plan that is made available to Members of 
Congress. Okay. So, that is two public banks you are involved 
with. How about Social Security? Well, yes, of course, Social 
Security, too.
    Wait a minute. I thought you don't trust the public--that 
the Federal Government employees can't chew gum and walk at the 
same time, yet you are involved in all these things. What about 
that? ``Well, that is different. That is really different. We 
can't trust it, when the idea comes from somebody else.''
    I think it is a very intriguing idea that I think we should 
pursue. And so I would like to ask--and, again, I appreciate 
Ms. Ocasio-Cortez bringing it forward, very much.
    I would like to ask Ms. Del Rio, in your testimony, you 
state that the public banking affords communities an 
opportunity to expand fair banking access and deepen the public 
investment in affordable housing and other critical economic 
sectors.
    If you could speak a little bit about that, but focus on 
the housing for me, that is the part that I think is very, very 
problematic for so many Americans. Go ahead, if you don't mind.
    Ms. Del Rio. Yes. Thank you so much for that question.
    I want to be really clear, public banking, for us and the 
coalitions we work with, is part of what we need to address 
market failure by our current banking system. And what we 
envision the public bank doing is really using the power of 
public deposits.
    For example, in New York City, we have an annual budget of 
$98 billion, and that money sits right now in Wall Street banks 
that are not reinvesting it equitably in our local communities 
and our economy.
    What a public bank could do is, first of all, strengthen 
existing networks of community development--loan funds and 
credit unions, these CDFIs that have filled the gaps that banks 
have left in low-income neighborhoods and communities of colors 
and that are providing full-service branches, low-cost and free 
accounts, small loans at non-usurious rates. And these are 
small institutions that do not have the economies of scale that 
big banks do. So this can be done. And a public bank would 
strengthen those institutions and help millions of individuals 
across the country gain access to fair and equitable financial 
services.
    Beyond that, as you mentioned, it would partner with these 
CDFI lenders and in other ways strengthen investments in truly 
affordable housing, in small-business development, and in other 
needs.
    We envision that happening in several ways, one of which 
could be in partner participation lending, for example, with 
these CDFI lenders. Credit unions do this routinely. And what 
it would do is allow small, community-based lenders that know 
their local community needs to be able to, ``punch above their 
weight,'' to underwrite projects that they on their own are too 
small to finance, using the leverage that a public bank and 
public funds would provide to those banks.
    Public banks could also create secondary markets to 
purchase loans. It could partner with credit unions in all 
sorts of ways to address liquidity constraints that they face 
and to make sure that they also are not overconcentrated in 
certain industries and certain parts of their lending.
    So it is really not a radical solution so much as taking 
what is working already and building on it with public funds.
    Mr. Vargas. Thank you for that very important discussion. I 
appreciate it.
    I do want to mention two things--one, a shout-out to some 
banks. In California, we did convince many of the banks and 
credit unions to use the Matricula Consular so we could have 
people who were undocumented or didn't have the ability to show 
a driver's license or others--now they do--to be banked. And 
that, I think, was very, very positive. So, a shout-out to 
them.
    And lastly, I would say, I do find it so hypocritical that 
people attack the Federal Government and they are part of the 
Federal Government, say that it doesn't work, and yet here we 
are, we are part of it.
    Anyway, with that, I yield back. Thank you, Mr. Chairman.
    Chairman Perlmutter. The gentleman yields back.
    I would like to just say, Ms. Del Rio, it is not a novel 
concept. Alexander Hamilton actually wanted to have a national 
bank. So, I appreciate the gentleman's questions.
    The gentleman from Tennessee, Mr. Rose, is recognized for 5 
minutes.
    Mr. Rose. Good afternoon, and thank you, Chairman 
Perlmutter and Ranking Member Luetkemeyer, for holding this 
hearing today.
    And thank you to our witnesses for being here today.
    As I have listened to--and, unfortunately, I haven't gotten 
to hear all of the testimony and questioning, but, as I 
listened early on to your statements, I couldn't help but 
remember back to my youth as a 4-H member in Putnam County, and 
my 4-H agents, Scott Chadwell and Donna Clouse, who came to my 
fourth-grade class with a novel idea that was supported by one 
of our local banks at that time called, ``First National 
Bank,'' which was the 4-H Thrift Club.
    And the idea was, you open--you go to your bank, you make 
your way--you make the pilgrimage down to the local bank 
branch, which, in my case, wasn't too far away at that time--I 
lived in a small town--and you open a bank account, Chairman 
Perlmutter, and you make a dollar-per-month deposit into that 
account.
    And if you did that for a whole year, then the bank gave 
you a reward, which, in many cases, was things like a ruler or 
a backpack or something like that, that was useful. And I 
still--my wife calls me a pack rat, and I think she is right, 
because I still have all of those tokens of appreciation from 
that first bank account, which I kept open until I started 
college.
    It wasn't a very impressive sum that I had saved over the 
8- to 10-year period, but the lesson that I learned from that 
early experience of having a bank account and knowing my banker 
and getting comfortable going into the bank has proven to be 
very valuable in life.
    As I listened to the discussion today, I noted some of the 
comments, and Mr. Pawar, you said something about having 
banking concentrated in the hands of a few. And I can think of 
no more pernicious concentration than a public option.
    In my time here in Washington, what I have come to conclude 
is that having the government be in charge of things is a 
particularly bad idea. There are a few things the government 
needs to be in charge of: Public safety and policing and 
protecting us from outside threats, those are things the 
government should be doing. But getting the government involved 
in banking is truly, I think, the worst idea that I have heard 
as a Member of Congress, and I hope it doesn't happen, and I 
will do everything I can to try to deter that from happening.
    So, I think about where we are with respect to banking in 
this country and the number of unbanked people, and I can't 
help but reflect upon the unending appetite for imposing 
greater regulations, which I think inevitably leads to making 
banking less successful, less available, and more expensive for 
Americans. And I would credit that as probably the number-one 
ill that we should be trying to fix, is to lower the cost of 
banking by eliminating unnecessary, redundant, duplicative 
regulations that make banking more expensive.
    As we have this discussion, I think it is important to 
remember that unbanked households are more prevalent in rural 
areas. Much of the Sixth District of Tennessee, which I 
represent, is rural, where unbanked households account for 8.6 
percent of total households.
    A large portion of my district, as I say, is in rural 
areas, and rural communities have seen increasing costs of 
accessing financial services, in part due to branch closures. 
We have heard that discussed today. As of the third quarter of 
2020, there were 13,000 fewer banks--I think we have heard that 
today, as well--in rural communities than in the 1980s. Where 
my farm is, in the rural part of my district, that is very 
true, with the two closest branches having closed in recent 
years.
    Mr. Berlau, could you discuss how Fintechs could step in to 
try and fill that gap in rural communities?
    Mr. Berlau. I think they could fill that gap just as far as 
with people going online. Also, they could partner with retail 
banks that wanted to open there. And hopefully, we will need 
either the--keep pushing on the agencies on the de novo banks, 
but they could partner as helping to provide underwriting and 
all types of services to the rural banks.
    Mr. Rose. And explain how the importance of expanding 
broadband plays into utilizing this emerging technology?
    Mr. Berlau. I think it is very important. We should really 
have the incentives to invest in broadband there.
    Mr. Berlau. I agree with you.
    Yet, I also welcomed the news, Mr. Rothstein, of your 
efforts, which reminded me of my early experience, by the way. 
I commend you for the work you are doing in helping make 
affordable bank accounts available. So keep up the good work, 
and I hope that we can turn back the tide of interest in public 
takeover of the banking industry.
    And with that, I yield back the balance of my time.
    Chairman Perlmutter. The gentleman yields back.
    The gentleman from California, Mr. Sherman, who is also the 
Chair of our Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets, is recognized for 5 
minutes.
    Mr. Sherman. Thank you.
    It is interesting to hear this discussion of the true 
lender issue. It is my colleagues who usually support States' 
rights who are now bemoaning the fact that a device used, a 
subterfuge used in conjunction with Federal regulators to 
defeat State laws was swept aside by this Congress. And I look 
forward to those who have talked about the true lender law to 
embrace the idea of the Federal Government making all of the 
decisions.
    I do hope that one of our witnesses, for the record--
because this isn't a fair question to ask you--would take a 
look at how many Americans don't just live more than 15 minutes 
from a financial institution branch but are also never within 
15 minutes when they either go shop for food or when they go to 
work. I, for example, live in the least urban part of my own 
district, so I am 15 minutes away from everything, but I have 
to get food, and there is a bank next-door.
    We need to provide people with more knowledge, particularly 
in the high schools. We need to encourage employers to engage 
in direct deposit with a bank. That means the bank will cut a 
better deal for the customer and you will bring the worker into 
the bank. And pay is too low, which is why we have so many 
Americans who don't have a net worth of $1,000 and get hit with 
overdraft protections, payday fees, et cetera.
    I want to thank the committee for including in today's 
hearing a discussion draft that would allow all Federal credit 
unions to add underserved areas to their field of membership 
and expand the ability of credit unions to lend to their member 
businesses in underserved areas.
    Mr. Berlau, with regard to the Expanding Financial Access 
for Underserved Communities Act, you write in your testimony 
that you support that approach. How, in your view, would this 
bill help those consumers and small businesses who don't 
currently have access to financial services?
    Mr. Berlau. It would allow credit unions, which are limited 
by field of membership rules now, to expand into those 
underserved areas if they think that they could maintain their 
safety and soundness. And the regulator would have to--the 
National Credit Union Administration would have to approve 
that.
    But it would be liberalizing some of the red tape around 
credit unions, which would be a very good idea. Also, I think 
it would be good to let credit unions make more business loans, 
to raise or repeal the member business lending cap.
    Mr. Sherman. Thank you.
    Ms. Baradaran, when it comes to the possibility of public 
banking options, I am a political realist. I think the 
operation and political hurdles are going to cause that to not 
be adopted in my lifetime. Some members of the committee are 
younger. So, in terms of addressing people's needs, I wonder 
whether it might make sense to focus on some other more 
available tools.
    In your written testimony, you say that Congress should 
focus on strengthening community reinvestment regulations. 
Could you explain how the Community Reinvestment Act (CRA) 
might be better leveraged to ensure that all Americans have 
access to financial services, depository institution services?
    Ms. Baradaran. Thank you for the question.
    The regulators have recently proposed a new CRA rule for 
notice and comment. And I do think that there are some really 
robust changes to the CRA that could benefit a lot of 
communitiies.
    It is not going to help a lot of the communities that don't 
have bank branches though, because the CRA is geographically-
focused. And that is one thing that the CRA reform can focus 
on, is that there are a lot of CRA deserts around where there 
are banking deserts, where the CRA requirements don't apply 
because they are geographically-constrained. So that is one 
reform, I think, that could potentially fix this.
    And I would not limit our political imaginations for what 
is possible. What the Federal Reserve did during the COVID 
crisis was very much out of line with what it had done before, 
and it was very good policy, and it had great work. And that is 
a public bank. We have, actually, a public bank. And so, the 
idea here is just to extend that reach.
    Mr. Sherman. And I would hope that CRA would not only 
direct banks into better serving the areas they do serve but 
also give them credit for serving any area that is completely 
unserved.
    I will put in a plug for my own hearing, today at 2 p.m., 
on bond rating agencies. You are welcome to be here if you are 
a member of the committee, whether or not you are a member of 
the subcommittee.
    I yield back.
    Chairman Perlmutter. Thank you, Mr. Sherman.
    The gentleman from South Carolina, Mr. Timmons, is now 
recognized for 5 minutes.
    Mr. Timmons. Thank you, Mr. Chairman.
    Mr. Berlau, what flaws and/or hurdles exist in public 
programs, such as the Post Office, that private financial 
institutions don't have when attempting to reach underserved 
markets?
    Mr. Berlau. I think the fact that private institutions 
compete against each other and they compete for new customers 
and they are always looking for innovation is the key. And I 
think the Post Office--again, there is a tension there between, 
is this to rescue the Post Office or is this for the Post 
Office to rescue others?
    And in the flaws, also, I don't think as far as the 
FedAccounts we want the government having direct access to 
sensitive financial data rather than having to subpoena a 
private bank. You have that layer there, consistent with the 
Fourth Amendment. But there have been data breaches in the 
government, as well as selective leaks, so with FedAccounts, 
our government basically having its own blockchain, rather than 
it being distributed, what could happen there?
    Plus, the question about it arbitrarily cutting off certain 
industries, as the Public Banking Act does for fossil fuels.
    Mr. Timmons. I feel like you are reading my mind.
    I am going to go in a little different direction now. Would 
a market-based solution that leverages an existing financial 
system, such as credit unions, get these financial products and 
services into the underserved markets faster and would the cost 
be less than with a government program?
    Mr. Berlau. I would think so, if we pushed more de novo 
credit unions, get more new entrants into the system. And what 
is already going on with community banks and credit unions and 
some of the entrepreneurial Fintech firms, yes, it is 
happening, and if we were to clear up some of the red tape, it 
would happen even faster.
    Mr. Timmons. And we have thousands of credit unions and 
small banks across this country. Why wouldn't we just 
incentivize those entities? And what would happen to them if a 
postal banking option was created?
    Mr. Berlau. It would be a government-subsidized 
competition, with the privileges of that. And it would also--
especially with FedAccounts, you are talking about having the 
deposits that are used to make loans now, so you would see sort 
of a suffering across the system as far as drying up for 
business loans. Some of the bank associations have warned about 
that.
    Mr. Timmons. And the credit unions and small banks, they 
employ tens of thousands of people all over this country. And 
would they likely not be able to compete in this market and 
therefore lose market share and likely therefore lose jobs?
    Mr. Berlau. I think, yes, it would take--when you have the 
advantages of the government and a budget from that, a budget 
that is all tied to a Federal Government that could print its 
own money, yes, that is a significant competitive advantage 
they would have over credit unions and community banks.
    Mr. Timmons. But I imagine they could go get jobs at the 
Post Office. There would be a lot of new jobs there.
    I just don't understand this proposal. I think this is a 
very important issue that we need to have good policy to pursue 
and fix it and make legitimate strides. But I think my 
colleague just said that this is not a proposal that will 
likely happen during his lifetime, so I would really hope that 
we can find some better ways to incentivize the free market, 
incentivize banks and credit unions to address this important 
issue. I am really hopeful we can find some policies there.
    You mentioned a lot of the biggest concerns I have. This 
has, ``Big Brother,'' written all over it. Would the FBI need a 
search warrant? Would the IRS be able to track what you put 
into your bank account and then say, ``How are you depositing 
all of this money every week? You are not paying taxes. You 
don't have a job.'' There are so many problems with privacy, 
not to mention data breaches. The Federal Government is 
terrible at cybersecurity. And to think that we are going to 
put millions and millions of consumers' records into the 
Federal Government's hands, it is just not a good plan. At the 
very least, we should address cybersecurity before that.
    I do hope that we can address this issue in a meaningful 
way with good policy, because I do think it is very important.
    With that, Mr. Chairman, I will yield back. Thank you.
    Chairman Perlmutter. The gentleman yields back.
    I think I need to defend the Post Office, which actually 
did provide banking services for about 50 years or more after 
there was a failure of the banking system back in the early--
like, 1908, there was a failure at the banking system.
    So it has been in existence, and it may be a policy matter 
for us to decide whether we want to put them back in the 
banking business or not. But I just, for some of my friends who 
have said this is the worst idea possible, clearly, this has 
been something that has been on the books for many, many years.
    With that, I yield 5 minutes to Mr. Lawson, who is 
attending from his office and is participating virtually.
    You are recognized for 5 minutes, sir.
    Mr. Lawson. Thank you, Mr. Chairman.
    And I would like to welcome everyone on the panel to this 
hearing.
    One of the things I would say in just getting started is 
that I grew up in a rural area about 12 miles from the city, 
longer in the end. By the time I was 15-years-old, I was able 
to go in to establish a savings account at a bank without any 
problems. And most of that I would attribute to the fact that 
either the 4-H club or the Future Farmers of America (FFA)--in 
attending those programs, where people brought information in 
telling you what you really could do, and so you had a great 
relationship.
    I would be opposed to the Post Office going into the 
banking business, because we have so many problems in Florida 
even with mail delivery, where people are constantly calling my 
office about how they can't get their mail, what is going on, 
there are not enough people working there, they have to hire 
people. And I don't know how that option would actually work, 
but I don't think that we should dwell on that at this time.
    But my question to the whole panel will be: Bank overdraft 
practices have been a barrier for far too long for low-income 
families, for as long as I can remember. And because I have 
been involved in the financial area for over 34 years, I see 
these same kinds of problems that are coming up over and over 
again.
    According to the Consumer Financial Protection Bureau 
(CFPB), 80 percent of the billions lost in overdraft fees this 
year are draining the families who have daily account balances 
which average over $350, so that is pretty low.
    And my question would be--because a lot of you all have all 
of the academic information and have been involved and 
everything else, and I know this is true from a lot of people 
that I have dealt with in the financial world for many, many 
years, how, then, can the credit unions, the community banks 
come up with a policy that can help these individuals and, at 
the same time, be compensated in some way other than charging 
high overdraft fees?
    Ms. Del Rio. May I answer that?
    Mr. Lawson. Yes. It is to the whole panel, for anybody who 
wants to respond.
    Ms. Del Rio. Sure. I am happy to start.
    I will say that the CDFI credit union that I am a part of 
does not charge hidden overdraft fees to our members. We see 
too many banks and even credit unions relying on these high and 
hidden fees as profit centers, especially in environments with 
low interest rates. So it is something that we categorically do 
not do, and we find other ways to sustain our operations and be 
profitable on our operations alone.
    Through my organization, New Economy Project's, legal 
hotline, we also assist hundreds of New Yorkers every year who 
call our hotline, in many cases with problems that relate to 
overdraft. And what we see routinely is that many people are 
charged these fees repeatedly, it adds up to hundreds of 
dollars or more at the end of a month, and when they are not 
able to repay those exorbitant fees, the banks will actually 
close their accounts, driving them out of the banking system, 
and then report those individuals to check systems and other 
consumer reporting databases. That, then, effectively 
blacklists those same people from opening accounts elsewhere.
    So, this is one way in which it is a massive extraction of 
wealth from neighborhoods of color, especially from low-income 
people, and it is also decreasing banking access. It is 
actively driving people out.
    So, addressing these consumer reporting databases, these 
overdraft practices, which the Federal Government has the 
authority and the ability to do, would go extremely far. Thank 
you for that question.
    Mr. Lawson. Would anyone else like to comment?
    Mr. Berlau. It was a very good question. I would also say, 
sometimes a small loan could be--even if you look at the APR, 
it is a better alternative than an overdraft. So, if you have 
more small loans, like, say, from bank or nonbank lenders, that 
could be--it may not be a super alternative, but that would be 
a better alternative than having an overdraft, plus it wouldn't 
harm your credit score.
    Mr. Rothstein. I also just want to say, Representative 
Lawson, that the type of accounts that don't have overdraft, 
that are fundamentally no-overdraft accounts, are extremely 
popular. So, whether it is the Bank On certified accounts that 
have more than 2 million people opening accounts in the last 
year recorded or even other products that are out there that 
don't have it, this is the movement for first-time workers, and 
younger people. These are popular accounts.
    Mr. Lawson. Thank you, Mr. Chairman. I yield back.
    Chairman Perlmutter. Thank you, Mr. Lawson.
    The gentleman's time has expired.
    The gentlewoman from New York, Ms. Ocasio-Cortez, is 
recognized for 5 minutes.
    Ms. Ocasio-Cortez. Thank you so much, Chairman Perlmutter.
    I think one of the things that is important to acknowledge 
is that this is one of our first congressional hearings on 
public banking in modern American history. And today is a 
historic day. I think it is a day worth celebrating. And I 
thank the Chair for his courage and his political courage and 
for being willing to convene this in front of the Financial 
Services Committee.
    Now, I learned a while ago--when I first got to Congress, I 
thought, man, people definitely study what they are talking 
about here. Then I got here and I realized that people don't 
even--a lot my colleagues don't even read the bills that they 
are commenting on.
    But for anyone who is curious, it is right here at the 
desk. We are making lots of statements that have nothing to do 
with the legislation. And frankly, if I made comments that very 
publicly demonstrated that I didn't read the legislation I was 
discussing, I would be embarrassed. But that is an aside.
    Here on Planet Earth, though, this bill is about providing 
a public option for financial services--an option, not a 
government takeover, right, Mr. Pawar? This is not about a 
government takeover of all banking services in the United 
States.
    But I do think we should talk about how things work now. 
Let's talk about some of the extractive practices of private, 
for-profit banking in this country and why we desperately need 
a public option.
    So, Ms. Del Rio, when a commercial bank decides whether to 
make a loan and what interest rate to charge, it considers not 
only the riskiness of the loan itself but it also incorporates 
the bank's target profit margins based on their quarterly goals 
and shareholder dividends, correct?
    Ms. Del Rio. Yes. I would say that banks are driven by 
profit-maximizing motives.
    Ms. Ocasio-Cortez. So it is not this mythology of, we have 
this interest rate based on how risky the loan is, but it is 
also, we have this interest rate based on how much of a profit 
margin on Wall Street we want to make.
    Now, isn't it the case that a public bank is likely to be a 
cheaper option than Wall Street for businesses and governments 
who seek affordable credit? Because a public bank is not-for-
profit, so it doesn't need to pad its interest rates in order 
to make a profit, isn't that right?
    Ms. Del Rio. Right. A public bank would be chartered to 
serve the public good, and it would remove the profit-seeking 
shareholders from the equation and allow for other benefits 
other than maximizing profits.
    Ms. Ocasio-Cortez. And a public bank ostensibly wouldn't 
have billionaire CEOs who are paid hundreds or thousands of 
times the amount that their lowest-paid employees are paid, 
isn't that correct?
    Ms. Del Rio. Yes. That is certainly our vision for public 
banking.
    Ms. Ocasio-Cortez. Now, in the same vein, public banks are 
able to extend credit and banking services to communities that 
Wall Street has deemed unprofitable, correct?
    Ms. Del Rio. Yes.
    Ms. Ocasio-Cortez. I represent parts of the Bronx, where 
more than half of the residents are either unbanked or 
underbanked. And we heard some stories today that I thought 
were very optimistic and rosy, like Wall Street executives will 
want to compete for business, and of course, they will extend 
services in low-income communities. But we are talking about 
Earth, right? And, on Planet Earth, there are a lot of 
communities that are not profitable to bank.
    How would the Federal Public Banking Act complement State- 
and city-level efforts across the country?
    Ms. Del Rio. Yes. Thank you for that question.
    We talk about the Federal Public Banking Act as a game-
changer for local efforts like ours in New York, where we are 
working with broad-based coalitions and more than 65 State 
legislators to create a State framework for local public banks 
across New York City.
    Right now, cities that would seek to charter public banks 
would have to go through commercial bank charters. What our 
legislation locally would do is create an appropriate and safe 
and sound framework with capitalization requirements and many 
other provisions to ensure sound governance--
    Ms. Ocasio-Cortez. Thank you. And I apologize for cutting 
you off, but I just have 30 seconds left. I am so sorry.
    Now, one big thing that people didn't know: Most public 
entities at State and municipal levels actually are forced to 
rely--your State, your city bank, the bank that your State and 
city works with are commercial banks too, right? A lot of 
people don't know that your city actually has to bank, keep the 
city's money with, like, a Chase or a Bank of America or a 
Santander, et cetera, because there is no public bank.
    And, as a result, those private banks can actually refuse 
to finance projects that are against their financial interest, 
right? Like, they can refuse to finance things like worker 
cooperatives or renewable energy projects if it cuts against 
their own profit margin. isn't that correct?
    Ms. Del Rio. That is absolutely correct.
    Ms. Ocasio-Cortez. Interesting.
    Chairman Perlmutter. The gentlelady's--
    Ms. Del Rio. The Act would provide technical assistance and 
grants and be a complement to local and State frameworks like 
ours in New York.
    Ms. Ocasio-Cortez. Thank you.
    Chairman Perlmutter. The gentlelady's time has expired.
    The gentlelady from Michigan, Ms. Tlaib, is recognized for 
5 minutes.
    Ms. Tlaib. Thank you so much, Mr. Chairman, for holding 
such an incredibly important hearing about, I think, a really 
critical issue, especially because many of these broken systems 
and structures that we continue to talk about existed prior to 
the pandemic, and, if anything, the pandemic just exposed how 
broken they are.
    So, I am so incredibly grateful for my colleague from New 
York, Representative Ocasio-Cortez, for leading the charge and 
reintroducing the Public Banking Act this Congress.
    Chairwoman Waters, thank you. Thank you for always wanting 
to continue to speak these truths about these broken structures 
within our country and our communities, especially communities 
of color.
    I represent the third-poorest congressional district in the 
country. And so, when people say, why do these things, it is 
because, I move with a sense of urgency. I don't have days or 
weeks for my residents. They are literally dying because they 
have no access to thrive.
    Nearly 20 percent, a quarter of U.S. adults, are unbanked 
and underbanked. And one of the most profound ways that this 
discrepancy has affected my residents is in housing. And this 
is not just somewhere to sleep. This is where people use their 
housing to put their kids through college, to get out of 
poverty. It is stability.
    So it is really bizarre--maybe not bizarre; maybe there is 
a different word--when people say, too-big-to-fail, we have to 
bail them out right now. And what a funny thing, ``too-big-to- 
fail.'' How about this? People. People are too important to 
fail. People in our country.
    So, when people talk about funding and all of this stuff--I 
keep hearing $700 billion to bail out the big banks. Guess 
what? The Special Inspector General says that the total was 
more like $16.8 trillion, and $4.6 trillion has already been 
paid out.
    The Great Recession that killed neighborhoods in my 
district was because of big banks. They devastated our local 
economy. Literally, foreclosures at the highest rates we have 
ever seen. Historic unemployment rates. Destroyed families in 
this country. It was the big banks. That is who did it.
    So, when we introduce bold initiatives where we say 
everyone should be included, we should have accessibility, we 
should not be judged for trying to do what is right. Because 
when I look at Michigan, we lost more Black homeownership than 
anywhere in the country. In 2019, homeownership rates of Black 
Americans in my community dropped to the lowest level since the 
Fair Housing Act was enacted in 1968. Do you hear me? That is 
how low it has gotten. It is close to 40 percent now.
    People used to envy Detroit, used to look at Wayne County, 
Michigan, and say, man, how are they able to lift people out of 
poverty? It was because of housing. So, when commercial banks 
shut out Black and Brown people from lending, they are not just 
closing the door on homeownership; they are closing the door on 
saving for children's education, the opportunity to build 
businesses, and the ability to retire with dignity.
    And so, it is hard for me to hear my colleagues sometimes 
judging my residents, because guess what, the majority of my 
colleagues are millionaires. They are in an income bracket that 
is so disconnected from the majority of American people in this 
country, that they don't understand what it means to live 
paycheck to paycheck.
    I remember the first time I was here, people were 
wondering, why are the Federal employees in the food bank line? 
And I thought, what are you talking about? You just shut down 
the government. They live paycheck to paycheck. Of course, they 
are in the food bank line. They have to feed their children and 
their families.
    Ms. Baradaran, How would access to public banking help 
residents in my community move towards homeownership and build 
wealth?
    Ms. Baradaran. Thank you for articulating that contrast 
really well.
    Access to public banking for residents is exactly what 
access to public banking for banks would do: It saves them. It 
throws them a lifeline when they are out of liquidity.
    This is what we did in the financial crisis. So, to people 
who say, ``Oh, well, let the private market do it,'' the 
private market would have failed. It would have been a 
completely bankrupt market in 2008, and again in 2020. And the 
public sector--the Federal Reserve, along with the Treasury and 
Congress--came in to save a lot of those public banks. And they 
asked them politely to please send some of those funds on to 
individuals. They had the choice, and they decided not to, in 
some cases.
    And so, when we talk about public money going to people, it 
is the same way that we do with banks. And if banks aren't 
choosing certain communities to help that they have not chosen, 
then we remedy that directly. It is just taking out the 
middleman. This is not a revision, this is not a radical--
    Ms. Tlaib. It is about accessibility, period. It is like 
they don't want all of us to have access. Because during the 
pandemic, one of the things that came up was obviously the 
Paycheck Protection Program (PPP). And guess who screwed my 
residents? The banks.
    In my district, smaller, Black-owned businesses struggled 
to claim the PPP program aid they needed because they lacked 
preexisting relationships with big banks. I had to call 
Chairwoman Waters a number of times to tell her, this bank is 
doing this, this bank is doing that.
    Ms. Del Rio, would public banking make administration of 
economic stimulus programs like the PPP program or the economic 
impact payments faster and more efficient for our communities?
    Ms. Del Rio. Yes, it would. And you can see that in public 
banks throughout the world, including in North Dakota, which 
had the highest rate per capita of PPP loans, in part because 
of what the Bank of North Dakota did to help local lenders get 
those funds out.
    And I will say also that, in New York and nationally, 
CDFIs, small lenders, had an outsized role in getting PPP funds 
out to small businesses. My relatively tiny $85-million CDFI 
credit union that I serve on the board of--
    Chairman Perlmutter. Ms. Del Rio, the gentlelady's time has 
expired.
    No other Members are here.
    I want to compliment and thank everybody. This is the best-
attended hearing this subcommittee has had. I want to thank you 
all. Obviously, a lot of strong passions have been expressed. 
This is a very serious subject.
    I want to thank the witnesses for their testimony today. 
You really helped kind of enlighten all of us, on all sides of 
this, and so I appreciate that.
    Without objection, a number of letters will be submitted 
into the record, from Prosperity Now, the American Bankers 
Association, the Bank Policy Institute, the National 
Association of Federally-Insured Credit Unions, the American 
Financial Services Association, the Consumer Bankers 
Association, and the Electronic Transactions Association.
    The Chair notes that some Members may have additional 
questions for these witnesses, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Thank you very much for participating in this hearing, in 
person and remotely. We appreciate your testimony.
    And, with that, this hearing is adjourned.
    [Whereupon, at 12:37 p.m., the hearing was adjourned.]

                            A P P E N D I X

                             July 21, 2021
                             
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